Identifier
Created
Classification
Origin
09PERTH54
2009-12-10 05:16:00
UNCLASSIFIED
Consulate Perth
Cable title:
AUSTRALIA: WHEATSTONE GAS AND EQUITY TO JAPAN
how-toVZCZCXRO2030 RR RUEHDT RUEHPB DE RUEHPT #0054/01 3440516 ZNR UUUUU ZZH R 100516Z DEC 09 FM AMCONSUL PERTH TO RUEHC/SECSTATE WASHDC 0438 INFO RUEHBY/AMEMBASSY CANBERRA 0444 RUEHBN/AMCONSUL MELBOURNE 0331 RUEHPT/AMCONSUL PERTH 0470 RUEHDN/AMCONSUL SYDNEY 0336 RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE RUEHBJ/AMEMBASSY BEIJING 0021 RUEHKO/AMEMBASSY TOKYO 0021 RUEHUL/AMEMBASSY SEOUL 0017 RUEHJA/AMEMBASSY JAKARTA 0021 RHMFISS/DEPT OF ENERGY WASHINGTON DC RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS SECTION 01 OF 02 PERTH 000054
SIPDIS
STATE FOR EEB MONOSSON
DOE FOR JEFF SKEER
USDOC FOR 3132/USFCS/OIO/EAP/JRULAND
USDOC FOR 4530/MAC/EAP/OPB/GPAINE
E.O. 12958: N/A
TAGS: EPET EINV ENRG AS
SUBJECT: AUSTRALIA: WHEATSTONE GAS AND EQUITY TO JAPAN
REF: A. REF A. CANBERRA 630
B. REF B. PERTH 40
PERTH 00000054 001.2 OF 002
UNCLAS SECTION 01 OF 02 PERTH 000054
SIPDIS
STATE FOR EEB MONOSSON
DOE FOR JEFF SKEER
USDOC FOR 3132/USFCS/OIO/EAP/JRULAND
USDOC FOR 4530/MAC/EAP/OPB/GPAINE
E.O. 12958: N/A
TAGS: EPET EINV ENRG AS
SUBJECT: AUSTRALIA: WHEATSTONE GAS AND EQUITY TO JAPAN
REF: A. REF A. CANBERRA 630
B. REF B. PERTH 40
PERTH 00000054 001.2 OF 002
1. SUMMARY: Less than a week after breaking ground on the US$37
billion Gorgon liquefied natural gas (LNG) project, U.S. oil and
gas company Chevron announced a cornerstone gas and equity
agreement with Japan for its majority-owned Wheatstone LNG
project in Western Australia. The estimated A$90 billion (US$82
billion) heads of agreement with Tokyo Electric Power is an
important step forward for the project which is seeking to be
Australia's fourth producing LNG processing plant in 2016. The
deal is also likely to enhance the prospect of the federal
government renewing several gas field retention leases under its
new "use it or lose it" approach (Ref A). END SUMMARY
Japan is Wheatstone Foundation Customer
2. Chevron announced December 5 that Tokyo Electric Power
Company (TEPCO) has agreed to buy 4.1 million tons per year
(mtpa) of LNG over the next 20 years from the WA-based
Wheatstone project. TEPCO will also take a 15-percent equity
share in Wheatstone's gas fields and an 11.25-percent share in
the gas processing facility which is proposed for an onshore
location near Onslow in WA's northwest. Media reports estimate
the value of the deal at A$90 billion (US$82 billion),although
company officials have not confirmed this figure.
Planning Well Underway
3. The foundation gas sale with TEPCO covers almost half of
Wheatstone's initial planned LNG production of 8.6 mtpa.
Project officials believe production could reach 25 mtpa through
deals with holders of nearby gasfields. In October subsidiaries
of U.S. Apache Corporation and of Kuwait's Foreign Petroleum
Exploration Company agreed to supply gas to the proposed
Wheatstone LNG plant, in exchange for equity stakes (16.25 and
8.75 percent respectively). Chevron officials say the company
will make a final investment decision on Wheatstone in 2011 with
production planned to start in about 2016. Chevron already has
550 staff working on the project and expects to create up to
6500 direct and indirect jobs during the construction.
Federal and State Officials Welcome the Deal
4. Federal Resources Minister Martin Ferguson welcomed the deal,
saying that the expanding suite of LNG investments will
transform Australia into an "energy superpower." The Reserve
Bank has forecast that LNG exports could increase fourfold by
2020, joining coal and iron ore as the country's biggest
exports. WA Premier Colin Barnett lauded the deal as the
largest-ever Australian export sales contract, bigger than
ExxonMobil's A$50 billion (US$45 billion) LNG sale to China in
August from the Gorgon project. Long-term export sales contracts
for Australian gas exceed A$500 billion this year.
Comment: Australia's 4th LNG Project?
5. The agreement with TEPCO, a respected veteran LNG customer,
boosts Wheatstone's feasibility ranking among the large slate of
Australian LNG projects (Ref B). With Inpex' announcement of a
delay to its Ichthyus project for Darwin, Wheatstone could
become Australia's fourth producing LNG facility sometime
mid-decade. The gas sale should also help Chevron in the face of
PERTH 00000054 002.2 OF 002
likely pressure from the government on its holding retention
leases for Wheatstone fields (Septel). Possible labor and
equipment shortages associated with the Gorgon project could
delay Wheatstone's ambitious timeline, potentially causing
problems if the government refuses to renew its leases. END
COMMENT
CHERN
SIPDIS
STATE FOR EEB MONOSSON
DOE FOR JEFF SKEER
USDOC FOR 3132/USFCS/OIO/EAP/JRULAND
USDOC FOR 4530/MAC/EAP/OPB/GPAINE
E.O. 12958: N/A
TAGS: EPET EINV ENRG AS
SUBJECT: AUSTRALIA: WHEATSTONE GAS AND EQUITY TO JAPAN
REF: A. REF A. CANBERRA 630
B. REF B. PERTH 40
PERTH 00000054 001.2 OF 002
1. SUMMARY: Less than a week after breaking ground on the US$37
billion Gorgon liquefied natural gas (LNG) project, U.S. oil and
gas company Chevron announced a cornerstone gas and equity
agreement with Japan for its majority-owned Wheatstone LNG
project in Western Australia. The estimated A$90 billion (US$82
billion) heads of agreement with Tokyo Electric Power is an
important step forward for the project which is seeking to be
Australia's fourth producing LNG processing plant in 2016. The
deal is also likely to enhance the prospect of the federal
government renewing several gas field retention leases under its
new "use it or lose it" approach (Ref A). END SUMMARY
Japan is Wheatstone Foundation Customer
2. Chevron announced December 5 that Tokyo Electric Power
Company (TEPCO) has agreed to buy 4.1 million tons per year
(mtpa) of LNG over the next 20 years from the WA-based
Wheatstone project. TEPCO will also take a 15-percent equity
share in Wheatstone's gas fields and an 11.25-percent share in
the gas processing facility which is proposed for an onshore
location near Onslow in WA's northwest. Media reports estimate
the value of the deal at A$90 billion (US$82 billion),although
company officials have not confirmed this figure.
Planning Well Underway
3. The foundation gas sale with TEPCO covers almost half of
Wheatstone's initial planned LNG production of 8.6 mtpa.
Project officials believe production could reach 25 mtpa through
deals with holders of nearby gasfields. In October subsidiaries
of U.S. Apache Corporation and of Kuwait's Foreign Petroleum
Exploration Company agreed to supply gas to the proposed
Wheatstone LNG plant, in exchange for equity stakes (16.25 and
8.75 percent respectively). Chevron officials say the company
will make a final investment decision on Wheatstone in 2011 with
production planned to start in about 2016. Chevron already has
550 staff working on the project and expects to create up to
6500 direct and indirect jobs during the construction.
Federal and State Officials Welcome the Deal
4. Federal Resources Minister Martin Ferguson welcomed the deal,
saying that the expanding suite of LNG investments will
transform Australia into an "energy superpower." The Reserve
Bank has forecast that LNG exports could increase fourfold by
2020, joining coal and iron ore as the country's biggest
exports. WA Premier Colin Barnett lauded the deal as the
largest-ever Australian export sales contract, bigger than
ExxonMobil's A$50 billion (US$45 billion) LNG sale to China in
August from the Gorgon project. Long-term export sales contracts
for Australian gas exceed A$500 billion this year.
Comment: Australia's 4th LNG Project?
5. The agreement with TEPCO, a respected veteran LNG customer,
boosts Wheatstone's feasibility ranking among the large slate of
Australian LNG projects (Ref B). With Inpex' announcement of a
delay to its Ichthyus project for Darwin, Wheatstone could
become Australia's fourth producing LNG facility sometime
mid-decade. The gas sale should also help Chevron in the face of
PERTH 00000054 002.2 OF 002
likely pressure from the government on its holding retention
leases for Wheatstone fields (Septel). Possible labor and
equipment shortages associated with the Gorgon project could
delay Wheatstone's ambitious timeline, potentially causing
problems if the government refuses to renew its leases. END
COMMENT
CHERN