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Chevron sells Shell stake in Australia project

By John Letzing , MarketWatch

SAN FRANCISCO (MarketWatch) — Chevron Corp. said Sunday it has agreed to sell a stake in its proposed Wheatstone natural-gas project in Australia, a key means for the U.S. oil giant to address growing demand for energy resources in China and other parts of Asia, to Royal Dutch Shell PLC.

Under the terms of the deal, Shell will gain an 8% interest in Chevron’s  Wheatstone and Iago natural gas fields offshore of northwest Australia.

In addition, Shell will gain a 6.4% interest in the project facilities, while Chevron will remain the project operator, Chevron said.

“The Wheatstone hub will provide a reliable new source of energy to Australia and the region. It will also further enhance Chevron’s position as a leading supplier of liquefied natural gas … in Asia-Pacific,” Chevron vice chairman George Kirkland said in a statement.

The planned Wheatstone project is a key element in Chevron’s plan, unveiled late last year, to increase capital spending this year by some $4.4 billion.

The project is seen as a significant bet by Chevron to be able to feed the continued, rapid economic expansion in China, which has outstripped growth in other parts of the world.

Chevron said Sunday that “front-end engineering and design activity” on the Wheatstone Project is nearing completion, adding that a “final investment decision” on the project is expected in the second half of this year.

John Letzing is a MarketWatch reporter based in San Francisco.


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