Chubu Electric Power acquires LNG interest in Australia

(November 27, 2009)

NAGOYA, JAPAN --Chubu Electric Power Co., Inc. has decided to purchase liquefied natural gas (LNG) produced by the Gorgon Project in Australia and acquire an interest in the project. On November 25, the utility established a wholly-owned Australian subsidiary for this purpose. It became the third Japanese company to decide in favor of outlays in and LNG purchase from the Gorgon Project, the first two being Tokyo Gas Co., Ltd. and Osaka Gas Co., Ltd. The move constitutes the third case of acquisition of upstream LNG interests by a Japanese electric power company.

The Gorgon Project is being promoted by the three firms Chevron, Shell, and ExxonMobil. It will produce about 15 million tons of LNG per year from a large-scale gas deposit located off the northwestern coast of the state of Western Australia. It is scheduled to commence supply in 2014.

Chubu Electric Power plans to purchase 1.44 million tons of LNG a year for a period of 25 years beginning in 2014. Of this total, the purchasing agreement is to apply a free-on-board (FOB) term for 940,000 tons and ex-ship term for 500,000 tons. Through its Australian subsidiary, the utility is going to acquire a 0.417% interest in the project from Chevron (TAPL) Pty Ltd, which is Chevron's Australian subsidiary. It expects to conclude the contracts in these areas before the end of 2009.

At present, Chubu Electric Power buys about 10 million tons of LNG every year. Its main sources are Qatar, Indonesia, and Australia. Its two current agreements with Indonesia will expire in 2010 and 2011.