Chevron and KOGAS Sign Major LNG and Equity Agreements for the Wheatstone Project

July 20, 2010
Chevron Corporation (NYSE: CVX) announced today that its Australian subsidiaries signed a Heads of Agreement (HOA) with Korea Gas Corporation (KOGAS) for the delivery of liquefied natural gas (LNG) from the Chevron-operated Wheatstone natural gas project in Australia.
“The Wheatstone hub at Ashburton North has been established to process our significant equity gas as well as third-party natural gas resources located in the Western Carnarvon Basin”
Under the HOA, KOGAS expects to purchase 1.5 million tons per annum (MTPA) of LNG for up to 20 years from the Wheatstone project participants. Approximately 75 percent of the 1.5 MTPA is expected to be purchased from Chevron, with the remainder from other Wheatstone hub participants.
In addition to being a foundation customer of the Wheatstone project, KOGAS signed an equity HOA to acquire a 5 percent interest in each of Chevron’s Wheatstone field licenses and in the Wheatstone project LNG and domestic gas processing facilities. Including this equity participation, KOGAS plans to take delivery of a total of approximately 1.95 MTPA of LNG from the Wheatstone project.
John Gass, president of Chevron Global Gas, welcomed KOGAS as a foundation customer and participant in the Wheatstone project. “Chevron is pleased to have KOGAS, the largest LNG buyer in the world, as part of the Wheatstone project. Their entry adds further momentum to this development,” Gass said.
Chevron Australia managing director, Roy Krzywosinski, said the agreement demonstrated successful coordinated LNG marketing for the Wheatstone foundation project. “The Wheatstone hub at Ashburton North has been established to process our significant equity gas as well as third-party natural gas resources located in the Western Carnarvon Basin,” Krzywosinski said.
Front-end engineering and design is currently being completed on the Wheatstone project ahead of a planned final investment decision in 2011.
In September 2009, KOGAS and Chevron also agreed to an HOA for the delivery of 1.5 MTPA of LNG from the Gorgon project for 15 years, with an option to extend the agreement for an additional five years.
In October 2009, Chevron announced it had signed a binding agreement with Apache Julimar Pty Ltd., a subsidiary of the Apache Corporation, which will assume a 16.25 percent equity interest in the Wheatstone project, and with KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the Kuwait Foreign Petroleum Exploration Company k.s.c., which will assume an 8.75 percent interest in the project. Chevron is responsible for the marketing of LNG from the Wheatstone project.
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