The agreement, which was signed in Beijing late Wednesday, will explore collaboration opportunities in the Chevron-operated WA-205-P permit area, offshore Western Australia, the major said.
The WA-205-P exploration permit is located in the highly prospective Carnarvon Basin and includes the Clio and Acme natural gas discoveries previously made by Chevron. Chevron's Australian subsidiary is the operator of WA-205-P and holds a combined 67% stake in it. Shell holds the rest.
Chevron said in August that it had discovered a "significant" natural gas find in the permit with the Acme-1 exploration well, adding that it was the largest of nine Chevron discoveries in Western Australia in the last 12 months.
It is expected the Clio and Acme gas fields will provide feed gas for the expansion of the Chevron-operated Wheatstone LNG hub being developed at Ashburton North. The new agreement offers CNPC an offtake opportunity from the expanded project, Chevron said.
A spokesman for Chevron said Thursday that the company was not disclosing any information yet on volumes or possible stake sizes in the project under the CNPC agreement.
The first phase of the Wheatstone project consists of two LNG processing trains with a total capacity of about 8.6 million mt/year. But Chevron is seeking environmental approvals for the project that will allow processing of up to 25 million mt/year, the company said.
The first two LNG trains at Wheatstone are expected to be supplied by the Wheatstone/Iago and Julimar/Brunello fields under a deal signed by subsidiaries of Chevron, Apache Corporation and the Kuwait Foreign Petroleum Exploration Co. in 2009.
Chevron has so far committed close to 7 million mt/year of Wheatstone's production to Japanese power utilities Kyushu Electric and Tokyo Electric Power Company as well as Korea Gas Corp. It has also sold stakes in the project to the three companies, with 1.37% going to Kyushu Electric, 5% going to South Korea's Kogas and 11.25% to Tepco.
In February, Patrick Blough, vice president for gas commercialization at Chevron Global Gas, said the company was aiming to wrap up long-term contracts for 85%-90% of production from Wheatstone LNG.
The current contracts cover 80% of production, the company spokesman said Thursday, and Chevron is still talking to companies for the remaining project volumes.
For CNPC, the deal is another step towards meeting the supply needs of its subsidiary Petrochina, which already has two LNG import terminals under construction: the 3 million mt/year Dalian terminal due for completion in the first quarter of 2011, and the 3.5 million mt/year Rudong terminal due to be completed in the first half of next year.
To date, Petrochina has MOUs or sales and purchase agreements covering 8 million mt/year of LNG imports with Qatargas and with Chevron's Gorgon project. It also has a joint venture agreement with Shell for the latter's Curtis Island CSG to LNG project.
While those agreements more than cover the import capacities of Petrochina's terminals under construction, the company has voiced plans for a further three terminals.
And it is unclear when the Wheatstone project expansion would start up. The initial project is expected to reach final investment decision in 2011, with production to start around 2016-2018. Any expansion would be at a later date, so the volumes under discussion for CNPC or Petrochina may not appear until the end of the next decade.
China Chemical Weekly: http://news.chemnet.com/en/detail-1411716.html
