In a historic energy deal, Chevron Corporation, one of the world's largest integrated energy companies, has entered into a preliminary agreement with Japan's largest utility Tokyo Electric Power Company (TEPCO) to supply 4.1 million tonnes per annum (MTPA) of Liquefied Natural Gas (LNG) from its Wheatstone project in northwestern Australia. (See: Chevron inks $60 billion gas deal with Japan and South Korea)

The deal signed between Chevron's subsidiary, Chevron Australia Pty Ltd and TEPCO, provides for up to 20 years of LNG supply for a contract value of around A$90 billion ($82 billion), though financial details of the deal have not been disclosed.

Under the terms, TEPCO would also acquire 15 per cent of Chevron's equity share in the Wheatstone field licenses off the Western Australian coast, and an 11.25 per cent interest in the Wheatstone natural gas processing facilities to be developed onshore near Onslow, about 1400km north of Perth in the Pilbara region, a statement said.

The contract covers nearly 50 per cent of the planned initial output of 8.6 MTPA at the Wheatstone plant. A final investment decision on the project is expected by next year.

Although Chevron did not disclose the commercial terms of the agreement, Western Australian Premier Colin Barnett, who welcomed the deal, said that the sales contract is worth $90 billion, which would make it the largest sales contract in Australian export industry.

It will also put Australia on track to becoming the second-largest LNG producer in the world by 2020, behind Qatar.

"We are pleased to welcome TEPCO as a foundation customer and equity partner in the Wheatstone project as we move the development forward. This agreement further demonstrates that Wheatstone is well positioned to deliver energy to the Asia-Pacific region," said George Kirkland, executive vice president, Chevron Global Upstream and Gas.

The new contract follows Chevron signing agreements in October with Apache Julimar Pty Ltd, a subsidiary of the Apache Corporation, which will assume a 16.25 per cent equity interest in the Wheatstone project, and KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the Kuwait Foreign Petroleum Exploration Company, which will assume an 8.75 per cent interest in the project. (See: Chevron ropes in Apache, Kuwait firm for Wheatstone project)

In September, Chevron had also signed three binding sale agreements worth $60 billion to supply liquefied natural gas (LNG) to Japan's Osaka Gas and Tokyo Gas, and GS Caltex Corporation of South Korea from the Gorgon project in Western Australia. (See: Chevron inks $60 billion gas deal with Japan and South Korea)

Discovered in 2004, Chevron's Wheatstone field is located in the WA-253-P and WA-17-R permit areas in water depths of around 650 feet (200 meters). The adjacent Iago field was discovered in 2000 and spans two retention permits.WA-17-R is wholly owned by Chevron Australia, while it has a majority interest in WA-16-R.

Chevron's first phase of the Wheatstone Project is expected to have an 8.6 MTPA processing capacity for LNG, with a domestic gas plant included.

Last week, Chevron awarded the front-end engineering design contract for Wheatstone's sub-sea gas gathering, offshore production platform and a 200km pipeline link to the onshore processing plant to two companies Intescea Pty Ltd, and Technip Oceania Pty Ltd. Earlier in June, the preliminary design work on the onshore part of the project was awarded to Bechtel Oil and Gas Chemicals.

Global oil and gas majors find Australia an attractive investment destination with its vast reserves of natural gas which is a cleaner fuel compared to oil and an anticipated surge in its demand in the fast-growing Asian economies in the coming years.

Chevron is working on another $40 billion Gorgon LNG project, also off Western Australia along with partners ExxonMobil and Shell. Chevron holds 50 per cent stake in the venture, while the other two has 25 per cent interest each. Gorgon, the largest of the ten proposed LNG projects in Australia has a capacity of 15 MTPA. The plant is scheduled to go on stream in 2014. (See: Chevron says partners Exxon, Shell approve Gorgon LNG Project)

ExxonMobil had signed long-term agreements with India's Petronet LNG as well as PetroChina Co for the supply of gas from Gorgon, while Chevron has tied up with Tokyo Gas Co, Osaka Gas Co and South Korea's GS Caltex for its production from Gorgon. (See: Petronet LNG Signs 20-year gas supply deal with Exxon Mobil  and China signs $41-billion gas deal with ExxonMobil's Australian arm)

A few days ago, ExxonMobil also concluded a gas supply deal with China Petroleum & Chemical Corp from its PNG LNG project in Papua New Guinea. On Saturday, the company has secured $3 billion in funding for the $15 billion project from the US Export-Import Bank

Following the closure of the Kashiwazaki Kariwa nuclear power plant in 2007, which was the world's largest nuclear electricity generator, Japan has been importing most of it energy requirements and making use of natural gas for power generation.

TEPCO supplies power to 43.9 million customers in Tokyo, Yokohama, and the rest of the Kanto region. One of the world's largest electric utilities, TEPCO with its 190 power plants, have the generating capacity of approximately 62,000 MW, mainly through thermal, nuclear, and hydroelectric power sources.