Chevron is upbeat on LNG prices for Wheatstone Oil major Chevron is bullish on the outlook for conventional liquefied natural gas prices after signing a non-binding heads of agreement with Japanese utility Tohoku to sell gas from its $US29billion Wheatstone project near Onslow in Western Australia.

Chevron Australia managing director Roy Kryzywosinski said the deal to sell Tohoku one million tonnes a year over 20 years was in line with traditional pricing for conventional LNG, adding "we have not seen a degradation in prices".

Mr Kryzywosinski questioned whether current low Henry Hub gas prices in the US, caused by a glut of shale gas, were sustainable and said while it was likely that LNG exports from North America would grow, he did not expect they would be "of a volume that will have a material impact on what we believe will be the LNG demand coming out of the Asia Pacific region".

After yesterday's deal, struck with partners Apache Energy and Kuwait Foreign Petroleum Exploration Company, Chevron has long-term contracts over 80 per cent of its gas to come from Wheatstone, and expects to expand it. Chevron is sticking to its $US43 billion budget and target of LNG by 2014 for the Gorgon project at Barrow Island.

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