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ADELAIDE: Chevron Corp has signed a preliminary agreement to sell Japan's Tohoku Electric one million tonnes of liquefied natural gas per year for 20 years, the US oil major said on Sunday.

The gas will come from its Wheatstone plant in Australia, Roy Krzywosinski, Chevron Austalia's managing director told reporters in Adelaide, adding that with this sale more than 80 percent of the gas from the 8.9 million tonnes per year (mtpa) Wheatstone project had been sold to Asian customers.

Wheatstone, located off the coast of Western Australia, is currently under construction, with the first gas shipments expected in 2016.

 Chevron plans to eventually expand the production of the $29 billion Wheatstone LNG plant to 25 mtpa.

 Chevron is positioning itself to become one of the largest LNG producers in Australia. Its $37 billion Gorgon project, also off Western Australia, will produce 15 mtpa by 2014.

The construction of Gorgon is now 40 percent complete, and Chevron expects to start the front end engineering and design phase for a fourth train on its current three-train project at the end of this year, Krzywosinski said.

The LNG deal comes as Japan's dependence on gas-fired power increases as it struggles to replace the nuclear capacity that has been taken offline since last year's earthquake and tsunami triggered the Fukushima nuclear crisis.

Tohoku is one of several Asian utilities to buy supplies from Wheatstone, including Chubu Electric Power, Tokyo Electric Power Company (TEPCO) and Kyushu Electric .

Chevron's partners in the Wheatstone project are Apache Corporation, Kuwait Foreign Petroleum Exploration Company (KUFPEC), Royal Dutch Shell and Kyushu Electric.

Australia is expected to surpass Qatar as the top LNG exporter by the end of the decade, when it would have quadrupled its current production of about 20 mtpa.

Copyright Reuters, 2012