Just days after a ¥1 trillion ($12.6 billion) bailout by the Japanese Government, stricken Tokyo Electric Power (TEPCO) appears poised to become one of the biggest investors in Australian LNG.
Reports out of Japan yesterday said a Japanese consortium including TEPCO, the owner of the Fukushima Dai-Ichi nuclear plant, was in the throes of finalising a $4.4 billion deal to buy into the Chevron-led Wheatstone LNG development.
In return, the consortium would emerge with about a 10 per cent stake in the $29 billion LNG development near Onslow, which is slated to produce 8.9 million tonnes of the liquefied fuel from 2016.
Yesterday, Chevron would not discuss the status of talks with the consortium.
We don't comment on market speculation. Discussions with Wheatstone customers are ongoing, a Chevron spokesman said.
Chevron announced in late 2009 that it had signed a landmark heads of agreement with TEPCO covering both LNG offtake (4.1 million tonnes annually for up to 20 years) and an equity stake in Wheatstone. The equity was to be 15 per cent in the gas fields and 11.25 per cent in the LNG plant, at Ashburton North.
The two parties confirmed a binding offtake agreement last July, just four months after the Fukushima disaster, covering 3.1mtpa and underscoring Japan's soaring demand for LNG to fill the void left by the shutdown of the country's nuclear power industry. The parties said at the time they continued to discuss an equity investment.
Those talks are expected to have been complicated by TEPCO's precarious financial position post- Fukushima, which sparked the government bailout.
According to media reports in Japan yesterday, the consortium discussing a Wheatstone investment includes the state-backed Japan Oil, Gas and Metals National Corp (JOGMEC), trading house Mitsubishi Corp and shipping company Nippon Yusen. Mitsubishi is already an investor in the North West Shelf and has just bought into the Woodside Browse project.
The Wheatstone partners are Chevron (72.1 per cent), Apache (13 per cent), Kuwait's Kufpec (7 per cent), Royal Dutch Shell (6.4 per cent) and Japan's Kyushu Electric (1.5 per cent).
It is unclear whether the Japanese equity investment would come with pro-rata LNG production, which could give the consortium about another 900,000 tonnes per annum to go with TEPCO's earlier-announced 3.1mpta.
The Japanese government announced just over a week ago that it would inject ¥1 trillion into TEPCO to shore up the financially stricken company in return for a stake of more than 50 per cent.
Copyright 2012 West Australian NewsPapers Limited. All Rights Reserved.
(Originally published in the May 17, 2012, edition of The West Australian.)