Chevron Australia has signed a Heads of Agreement (HOA) with Tokyo Gas Co. Ltd, a major Japanese utility company, regarding the purchase of 1.2 million tonnes per annum (MTPA) of Gorgon LNG beginning 2010 over a 25-year period. Financial details were not disclosed.

The parties also are discussing the potential sale and purchase of an equity interest in the Gorgon Project. Commenting on the announcement, John Watson, president of Chevron International Exploration and Production, said, "This agreement demonstrates the attractiveness of Gorgon LNG and moves the Greater Gorgon Area gas resources closer to commercialization. As demand for natural gas increases, Chevron is committed to connecting our large, undeveloped gas resources to growing world gas markets."

John Gass, president of Chevron Global Gas, added, "This milestone highlights the opportunities that are emerging in the Asia-Pacific market due to rising demand for reliable and clean energy. As we continue to grow an integrated natural gas business, we are focused on maximizing the links in the entire gas value chain, from wellhead to burner tip." The HOA was signed by Jay Johnson, managing director of Chevron Australia, and Tadaaki Maeda, member of the board, senior executive officer and chief executive of The Energy Resources Division of Tokyo Gas, at a ceremony held in Perth, Australia.

"Chevron Australia welcomes Tokyo Gas as its first foundation customer for Gorgon, and we look forward to building on our longstanding relationship. Australia is already a leading supplier of LNG to the Asia region, and this deal puts the two groups on a firm path to finalize terms for delivery of Gorgon LNG into Japan," said Johnson. He added, "Chevron will continue to target LNG markets in Asia and North America for its remaining volumes of Gorgon LNG."

The Gorgon Project, located off the northwest Australian coast, is currently undertaking front-end engineering and design work. Plans include an initial two-train (10 MTPA) LNG facility and domestic gas plant located on Barrow Island. Chevron Australia holds a 50 percent operating interest, and the project participants are the Australian subsidiaries of Shell (25 percent) and ExxonMobil (25 percent).