Chevron Corp on Dec. 22 said it has agreed to sell up to 1 million tonnes a year of liquefied natural gas (LNG) from its Australian Gorgon project to China Huadian Green Energy Co over 10 years starting in 2020.
The non-binding agreement comes amid a deterioration in Asian LNG prices, aggravated by mounting supply from Australia, which aims to overtake Qatar as the world's top producer in coming years.
The price has slid two-thirds since 2014 to under $7 per mmBtu.
"This is an important step in the commercialisation of Chevron's natural gas holdings in Australia," Pierre Breber, executive vice president of Chevron Gas and Midstream, said in a statement.
Chevron in January signed a contract with South Korea's SK LNG Trading Pte Ltd to supply 4.15 million tonnes of LNG from Australia over five years starting in 2017.
The Gorgon project combines the development of the Gorgon field and the nearby Jansz-Io field and is capable of producing 15.6 million tonnes of LNG a year.
China Huadian Green Energy is a subsidiary of state-owned power generator China Huadian Group.
The Gorgon project is a joint venture between Chevron, which holds a 47.3 percent stake, ExxonMobil and Royal Dutch Shell, each with 25 percent, and three Japanese utilities.
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