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AFX Europe (Focus): Australian Trade Minister says Gorgon LNG deal with Chubu worth 10 bln aud: Chevron's partners are ExxonMobil Corp and Royal Dutch Shell, which each own 25 pct.: Tuesday November 22, 2005

 

SYDNEY (AFX) - Trade Minister Mark Vaile has valued Chevron Corp's agreement to supply liquefied natural gas (LNG) to Japan's Chubu Electric Co from Australia's Gorgon gas project at 10 bln aud.

 

In a statement following Chevron announcing it has signed a heads of agreement with Chubu over the supply of gas to Japanese regional electricity generator, Vaile said the deal is further evidence of the dynamism of the Australia-Japan energy relationship.

 

Under the deal, Chubu will purchase 1.5 mln metric tons per annum (mtpa) of Gorgon LNG over 25 years starting in 2010, representing part of Chevron's share of the reserves at the project which it 50 pct owns and operates.

 

Chevron's announcement did not disclose the terms of the deal.

 

Chevron's partners are ExxonMobil Corp and Royal Dutch Shell, which each own 25 pct.

 

The latest deal follows an eight bln aud deal struck by Chevron in October to sell 1.2 mln tons per annum of LNG to Tokyo Gas Co from the Gorgon project, off Australia's northwest coast, and takes the project closer to committing all of its 12.9 trln cubic feet of gas reserves.

 

Vaile said Chevron's agreement with Chubu represents a broadening of the Japanese involvement with the Gorgon project and provides clear evidence of the strength of the Japanese economy.

 

He also welcomed Chevron announcing Chubu may buy part of the US energy giant's equity interest in the Gorgon project.

 

Chevron also said it plans to secure further sales of Gorgon LNG to Japan, the world's largest LNG consumer, while continuing to market Gorgon gas elsewhere in Asia and North America.

 

Shell has already committed its share of the project's output to a new LNG import terminal to be built in Mexico but ExxonMobil has not announced any deal over its share of output.

 

A final investment decision on the development project which is likely to cost about 11 bln aud to construct, is expected in mid-2006 with first production scheduled for 2010.

 

(1 usd = 1.36 aud)

 

bruce.hextall@xfn.com

 

blh/dg/dk

 

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