Largest Ever LNG Deal Signed Between Australia and Korea

Australian subsidiaries of Chevron Corporation and Korea Gas Corporation (KOGAS) have signed a Heads of Agreement (HOA) in Perth last night for the delivery of 1.5 million tonnes per annum (MTPA) of Liquefied Natural Gas (LNG) for 15 years from the Gorgon project.

As part of the arrangement, Chevron and KOGAS have an option to extend the agreement for a further five years. The parties are also discussing LNG sales and an equity purchase from Chevron’s Wheatstone project, to be located in the western Pilbara region about 200 kilometers south of the Wheatstone natural gas field.

Chevron Australia Managing Director Roy Krzywosinski, welcomed KOGAS as a major customer of the Gorgon project, which received approval to start construction earlier this week.

"This agreement represents the largest, long-term LNG sale between Australia and Korea, and the first long term sale between KOGAS and an Australian supplier. Korea is the world's second largest importer of LNG and is a desirable market for LNG," said Krzywosinski.

"The sale of Gorgon LNG to Korea reflects Australia's growing reputation as an LNG supplier. We expect to build on this relationship with KOGAS as we move forward with our Australian LNG projects."

This announcement follows Sale and Purchase Agreements with GS Caltex, Osaka Gas and Tokyo Gas, which were announced on September 10, 2009. Chevron expects additional agreements for the sale of Gorgon LNG to be executed in the coming months.

KOGAS was incorporated by the Korean Government in 1983 and has grown to become the largest single LNG buyer in the world. It operates three LNG import terminals as well as a gas pipeline network spanning more than 2700 kilometers across Korea.

The Gorgon project is operated by Chevron Australia Pty Ltd (50 percent) in joint venture with the Australian subsidiaries of ExxonMobil (25 percent) and Shell (25 percent). The project's scope includes a three-train, 15 MTPA LNG facility; a carbon dioxide injection project expected to be the world's largest; and a domestic gas plant.