Chevron, Sempra boost Japan’s LNG

By Eric Watkins

LOS ANGELES, April 18 – Japan’s increased demand for liquefied natural gas got a boost when Chevron Corp and Sempra Energy each announced agreements with Japanese power and trading firms for increased supplies.

Chevron Corp said its Australian subsidiaries signed a non-binding Heads of Agreement with Chubu Electric Power Co for the delivery of liquefied natural gas from the Wheatstone natural gas project in Australia.

Under the agreement, Chevron, together with Apache Energy and KUFPEC, is expected to deliver 1 million tons per annum (MTPA) of LNG to Chubu for up to 20 years from Wheatstone, in addition to other supplies from the Gorgon project.

“Chubu is a long term customer of our Australian natural gas portfolio and is due to receive 2.5 MTPA of LNG collectively from the Gorgon and Wheatstone projects,” said Chevron Gas and Midstream President Joe Geagea.


The Chevron-operated Wheatstone Project is set to become one of Australia’s largest resource projects. Located at Ashburton North, 12 km west of Onslow in Western Australia, the project’s foundation phase will consist of two LNG trains with a combined capacity of 8.9 MTPA and a domestic gas plant.

The onshore foundation project is a joint venture between the Australian subsidiaries of Chevron, operator with 72.14%, Apache 13%, Kuwait Foreign Petroleum Exploration Co 7%, Shell 6.4% and Kyushu Electric 1.46%.

Chevron’s announcement coincided with one by Sempra Energy that its Cameron LNG unit signed commercial development agreements with Mitsubishi Corp and Mitsui & Co., Ltd. to develop and construct a natural gas liquefaction export facility at Cameron’s receipt terminal in Hackberry, Louisiana.

Sempra said that the commercial development agreements bind the parties to fund all development expenses and to negotiate 20-year tolling agreements, based on agreed-upon terms.

“Each tolling agreement would be for 4 MTPA,” Sempra said, adding that “negotiations with other parties for the export of the remaining 4 MTPA are ongoing.”


The completed liquefaction facility is expected to be comprised of three liquefaction trains with a total export capability of 12 MTPA of LNG, with operations to begin by yearend 2016.

Sempra said the liquefaction facility will utilize Cameron LNG’s existing facilities, including two marine berths capable of accommodating Q-Flex sized LNG ships, three LNG storage tanks of 480,000 cu m, and vaporization capability for regasification services of 1.5 billion cubic feet per day.

Due to the closure of most nuclear power plants in Japan following the Fukushima disaster, the country’s five major power utilities were expected to see their total fuel bill reach roughly 5.15 trillion yen in fiscal 2011, a whopping 60% jump on the year (WWE, Apr 12, 2012).

Along with Chubu, Tokyo Electric Power Co, Kansai Electric Power Co., Tohoku Electric Power Co. and Kyushu Electric Power Co. own a combined 41 nuclear reactors – with only one of them operating at the moment.

Capacity utilization at Japan’s nuclear plants sank to around 20% for fiscal year 2011, down from nearly 70% on average in fiscal 2010, with utilities ramping up operations at oil- and gas-fired power plants instead.

In addition to oil and gas, Japan has also been looking into the feasibility of using geothermal and wind power to replace the former nuclear facility at Fukushima (WWE, Mar 26, 2012).

© Glamma Productions 2012


About Eric Watkins

Eric Watkins is a consultant specializing in oil diplomacy. A former journalist, Mr. Watkins's work has appeared in numerous leading publications including The Wall Street Journal, The Economist, The Financial Times, and specialist media such as Oil & Gas Journal, Middle East Economic Survey (MEES), and Lloyd's List.
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