SYDNEY, Dec 22 (Reuters) - Chevron Corp (N:CVX) CVX.N on Tuesday 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 heads of agreement comes amid a deterioration in Asian LNG prices LNG-AS , 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 a 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 XOM.N and Royal Dutch Shell RDSa.L , each with 25 percent, and three Japanese utilities.