Shell Joins Chevron's Wheatstone Project

Royal Dutch Shell will join Chevron Corp’s Wheatstone liquefied natural gas project off the coast of Western Australia.

Chevron will sell 6.4 percent of its stake to Shell, and remain the operator of the project with 73.6 percent stake. Shell will also assume an 8 percent participating interest in the Wheatstone and Iago natural gas fields, which will supply the first two trains of the Wheatstone project.

The agreement comes as Chevron moves towards reaching a final investment decision in the second half of this year.

"A final investment decision is expected in the second half of this year once environmental approvals and other associated agreements are finalized with various levels of government," Chevron Australia managing director, Roy Krzywosinski said in a statement. He also said front-end engineering and design (FEED) activity on Wheatstone is nearly complete.

The first phase of the Wheatstone project will have a combined capacity of 8.9 million tonnes per annum (mtpa) of LNG as well as a domestic gas plant.

Chevron is positioning itself to become one of the largest LNG producers in Australia, with the construction of the A$43 billion Gorgon project.

Shell is also an equity partner in the Gorgon project off Western Australia, which is set to produce 15 mtpa by 2014.

Apache Corporation and Kuwait Foreign Petroleum Exploration Company (KUFPEC) have also signed deals to become equity participants in Wheatstone and hold 13 percent and 7 percent equity, respectively.

Tokyo Electric Power Company (TEPCO) and Kyushu Electric Power Company have also expressed intention to become equity participants in the project.

Both companies have already signed heads of agreement to buy Wheatstone LNG. Korea Gas Corporation has also signed a heads of agreement to purchase LNG from the project.