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NYK Jointly Participates in Wheatstone LNG Project

June 18, 2012

Nippon Yusen Kabushiki Kaisha (NYK), together with the Mitsubishi Corporation (MC) and the Tokyo Electric Power Company Incorporated (TEPCO), today announced their participation in the Wheatstone LNG project, which is being promoted by the U.S.-based Chevron Corporation and other companies in Australia.  

The consortium of NYK, MC, and TEPCO has obtained equity interests in the project (gas fields: 10%, LNG plant: 8%) through a newly established special-purpose company called PE Wheatstone Pty. Ltd. (PEW), which is headquartered in Perth, Western Australia. PEW will lift a certain volume of LNG in the project in proportion to its equity interest.
 
The project is led and operated by Chevron, and construction work is in progress with the aim of starting LNG production from the end of 2016. The project will produce 8.9 million tons per annum (mtpa) of LNG. TEPCO executed two Heads of Agreements with Chevron in December 2009 to acquire an equity interest in and purchase approximately 3.1 mtpa of LNG from the project.
 
However, after the Great East Japan Earthquake in March 2011, TEPCO faced difficulties participating in the project on its own, and given the importance of securing stable energy resources for Japan, TEPCO made a proposal to MC and NYK to jointly participate in light of TEPCO’s financial constraints. MC and NYK, which have a long-term relationship through joint ownership and operation of LNG carriers, respectively decided to participate after conducting detailed analyses of technologies, legal matters, finance, and economics.
 
The consortium believes that participation in the project will contribute to the stable supply of energy to Japan. Based on this belief, it has applied to Japan Oil, Gas and Metals National Corporation (JOGMEC) for application of its finance support system in order to secure valuable energy resources through public-private cooperation. Following examination by JOGMEC, the project was approved as eligible for equity financing1 and a loan guarantee.2 In addition, the consortium is now discussing support finance with private-sector banks and the Japan Bank for International Cooperation (JBIC).
 
By participating in the project, approximately 0.7 mtpa of LNG, PEW’s equity share of production, will be supplied to TEPCO. Including the approximate 3.1 mtpa TEPCO secured through Sale and Purchase Agreements (SPA) with Chevron and others in July 2011 and another 0.4 mtpa TEPCO secured through an SPA with Chevron today, approximately 4.2 mtpa of LNG will be supplied to TEPCO in total from the project.
 
Competition is increasing globally to secure energy resources, with natural gas in growing demand as a clean energy resource. Under these circumstances, today’s participation has profound meaning as a move by Japanese energy-related companies to secure energy resources with government support.
 
The final investment decision on the project was made in September 2011. The project will be an important supply source for Japan in securing stable LNG supplies in view of the low construction and operational risk since the project is operated by Chevron, which has extensive experience in Australia, a geopolitically advantageous country. NYK, together with MC and TEPCO, will leverage each company’s know-how and expertise in the LNG value chain from upstream to downstream (exploration & production, liquefaction, transportation and delivery) to establish a highly reliable LNG supply system in order to contribute to the stable and long-term supply of energy resources to Japan.
 
1JOGMEC, MC, NYK, and TEPCO will invest in Pan Pacific Energy, the parent company of PEW.
 
2JOGMEC’s guarantee for finance to PEW will cover all finance by private-sector banks with which discussions are in progress.
 
 
1. Schematic Diagram


2. Wheatstone LNG Project Location

3. Outline of Wheatstone LNG Project

 

LNG plant
Chevron 72.136%, Apache 13%, KUFPEC 7%, Shell 6.4%, Kyushu Electric 1.464%
(PEW will acquire an 8% equity interest from Chevron)
Gas fields
Wheatstone & Lago fields
Chevron 90.17%, Shell 8.00%, Kyushu Electric 1.83%
(PEW will acquire a 10% equity interest from Chevron)
Julimar and Brunello fields
Apache 65%, KUFPEC 35%
Production schedule
End of 2016
Production volume
8.9 mtpa
LNG plant location
Ashburton North, Western Australia, Australia

 
4. Outline of each company
<PE>

Name
Pan Pacific Energy K.K.
Head office
Chiyoda-ku, Tokyo, Japan
Established
22 May 2012
Representative
Hidetoshi Otsuka
Shareholders
MC 39.70%, NYK Line 10.20%, TEPCO 8.02%, JOGMEC 42.08%

 
<PEW>

Name
PE Wheatstone Pty. Ltd.
Head office
Perth, Western Australia, Australia
Established
15 June 2012
Representative
Toshiaki Koizumi
Shareholders
PE 99.90%, Tokyo Electric 0.10%

 
<Chevron>

Name
Chevron Australia Pty. Ltd.
Chevron (TAPL) Pty. Ltd.
Outline
Australian affiliates of Chevron Corporation
Head office
Perth, Western Australia, Australia
Established
Chevron Australia Pty. Ltd. (2005)
Chevron (TAPL) Pty. Ltd. (1998)

 
<Apache>

Name
Apache Julimar Pty. Ltd.
Outline
Australian affiliate of the US oil and gas company, Apache Corporation
Head office
Perth, Western Australia, Australia
Established
2008

 
<KUFPEC>

Name
KUFPEC Australia (Julimar) Pty. Ltd.
Outline
Australian affiliate of KUFPEC (affiliate of Kuwait Petroleum Company)
Head office
Perth, Western Australia, Australia
Established
2009

 
<Shell>

Name
Shell Development (Australia) Pty. Ltd.
Outline
Australian affiliate of Shell
Head office
Melbourne, Victoria, Australia

 
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