LNG

April 7 (LNGJ) - Chevron Corp has signed a binding Sale and Purchase Agreement (SPA) with Japanese utility Hokkaido Gas for the delivery of LNG from Chevron’s global portfolio to the Hokkaido area. Under the deal, Chevron will supply Sapporo-based Hokkaido Gas with about 500,000 tonnes of LNG over a period of five years starting in April 2022. “We are delighted to design and execute an SPA with our new partner Hokkaido Gas that will bring Chevron LNG directly to Hokkaido, a key growth area,” said the US major. “It broadens our customer base in Japan, a market that is foundational to our LNG business,” added Chevron.

Chevron Corp. has pulled out of the bidding battle for Anadarko Petroleum and its Mozambique liquefied natural gas stake and US assets, leaving the way clear for Occidental Petroleum to acquire Anadarko and for French major Total to own the African and LNG assets.

Anadarko Petroleum Corp, the US domestic oil and gas operator and stakeholder in Mozambique LNG, said it intended to resume negotiations with Occidental Petroleum Corp. in response to its takeover offer valued at $38 billon.

The Anadarko statement follows its acceptance on April 11 of a takeover bid of $33Bln from Chevron Corp. and the signing of a formal merger agreement.

“Anadarko is resuming its earlier negotiations with Occidental because Anadarko's board of directors, following consultation with its financial and legal advisors, has unanimously determined that the Occidental proposal could reasonably be expected to result in a ‘superior proposal’ as defined in the Chevron merger agreement,” stated Anadarko.

“The Occidental proposal reflects significant improvement with respect to indicative value, terms and conditions, and closing certainty as compared to any previous proposal Occidental made to Anadarko,” it added.

Anadarko, whose headquarters are near Houston, is being target because of its strength in US shale production, especially in the Delaware Basin of Texas and New Mexico. Its other main US assets are in Colorado and the Gulf of Mexico.

It also owns valuable assets in deep water oil and LNG, including Anadarko’s planned onshore development in Mozambique which is advancing, according to its latest earnings statement.

The company remains positioned to take a final investment decision on Mozambique LNG in the first half of this year.

Analysts said the competition to acquire Anadarko may force Chevron to consider whether it should make a higher offer.

Analysts noted that Chevron is a substantial LNG player and operates two world-class plants in Western Australia and would fit with Anadarko’s development plans for Mozambique.

The $33Bln bid from Chevron and the $38Bln offer from Occidental would be valued at an additional $17Bln because of the scale of Anadarko’s debt commitments.

Occidental, a major North American chemicals manufacturer, has no LNG assets and is centred on US oil and gas as well as midstream, marketing and refining.

Chevron Corp. has revived its almost dormant Canadian Kitimat liquefied national gas project originally proposed with Apache Corp. for Bish Cove in British Canada by applying to regulators for export capacity of up to 18 million tonnes per annum.

Chevron, the operator of two LNG export plants in Western Australia, now has Australian company Woodside Petroleum as its partner after Woodside purchased assets from Apache in 2014, including stakes in Wheatstone LNG in Australia and the Kitimat venture in BC.

“Chevron and Woodside have applied for a new licence for their Kitimat LNG plant in northern British Columbia that could see it nearly double in size,” said Chevron.

The companies have submitted the application to Canada’s National Energy Board with a revised plant design that may include up to three LNG processing Trains instead of two.

“Chevron and Woodside have re-evaluated the originally proposed two-Train, 10 MPTA LNG plant development concept, with a focus on improving Kitimat LNG cost of supply competitiveness relative to other global LNG projects,” Chevron said in a statement.

The re-launching of the Bish Cove project follows a final investment decision made in October 2018 by the Royal Dutch Shell-led LNG Canada joint venture.

Both plant sites are almost adjacent and are located about 650 kilometres north of the province’s largest city, Vancouver.

Shell and its Asian partners, including PetroChina, Petronas of Malaysia, Japan's Mitsubishi and Korea Gas corp. have started work at the brownfield site, also near Kitimat, and which had been an energy products terminal before being acquired by Shell in 2011 when the Chevron project was already progressing nearby.

The Shell project includes a US$5-billion pipeline of 670 kilometres being developed by TransCanada Corp. to bring the feed-gas from the Montney shale basin in northeast BC to the Pacific Coast.

Shell will initially produce 14 MTPA of LNG and has an option to increase its capacity to 28 MTPA.

Feed-gas for Chevron’s Kitimat plant will come from the large upstream shale-gas resources in the 322,000 net acres it has in the Horn River and Liard Basins of northeast BC.

Chevron will then transport the gas on the proposed Pacific Trail Pipeline to the site at Bish Cove.

The US major noted that its Kitimat LNG project was the most mature of the proposed Canadian LNG ventures and it also has an established partnership with the Haisla First Nation who live in the Kitimat area.

“We have key federal and provincial environmental approvals and licenses in place and substantial early work on the LNG site and pipeline route is underway,” said Chevron.

Chevron has a 50-50 partnership with Woodside in the Kitimat venture, though they have yet to disclosed cost estimates or investment and construction schedules.

The Kitimat joint venture said in March 2018 that it had been drilling some appraisal wells in the Liard Basin, though there has been little progress over several years on the plant development front.

However, some environmental and LNG export permits and First Nations benefits agreements are still in place for the liquefaction plant.

Chevron, the US major whose assets include with two large liquefied natural gas plants in Western Australia, said it signed a sales and purchase agreement with GS Caltex Corp. for the delivery of LNG to South Korea from Chevron’s global supply portfolio.