Tepco may back out of Chevron's Wheatstone LNG project

Tokyo Electric Power Co. (Tepco) said it may have to back out of a plan to purchase a stake in one of Chevron Corp.'s Wheatstone natural gas projects, on the same day they sealed a major gas supply deal.

Tepco signed sales and purchase agreements to buy LNG from the Wheatstone project, but the Japanese firm did not finalize another part of the deal to buy 11.25% of Wheatstone's LNG processing facility and 15% of its related gas fields.

"We are hoping to buy these stakes, but we are not sure if we can, given the worsening of our financial position," said Yukio Kani, Tepco's Fuel Department general manager.

Tepco's finances have been hard-hit since the March 11 earthquake and tsunami that crippled its Fukushima Daiichi nuclear complex. In May it reported an annual loss equivalent to $15 billion.

Chevron, along with partners Apache Corp. and Kuwait Foreign Petroleum Exploration Co., will meanwhile export 3.1 million metric tons of LNG annually for up to 20 years to Tepco from Wheatstone starting in 2017.

Financial terms of Chevron’s agreement with Tepco were not disclosed.

Contact Eric Watkins at hippalus@yahoo.com.

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