What is a petajoule and why is it used in this context?

A petajoule (PJ) is a unit of energy, equivalent to one quadrillion (10^15) joules. It is commonly used in the energy industry to measure large quantities of natural gas, as it provides a standardized metric for the energy content of the gas, which is more precise than simply measuring volume, as volume can vary with temperature and pressure.

Who is Horizon Power and what is its role in Western Australia?

Horizon Power is a state-owned electricity utility in Western Australia. It is responsible for generating, distributing, and retailing electricity to regional and remote communities across the vast expanse of Western Australia, often managing isolated power systems and microgrids to ensure reliable supply where larger grids are not feasible.

What is the broader significance of this domestic gas supply deal for Western Australia's energy landscape?

This agreement is broadly significant for Western Australia's energy landscape as it secures a substantial, long-term supply of locally produced natural gas for a key regional utility. It enhances energy security for numerous communities, helps stabilize electricity costs by providing a predictable fuel source, and reinforces the commitment to utilizing domestic resources for local power generation, reducing reliance on potentially volatile spot market purchases.

Rigzone · March 6, 2026 (Mar 6) · 1 min read

Chevron Inks 5-Year Deal to Supply Aussie Gas to Horizon Power

Chevron Corporation

Analysis

OilCyprus Editorial

Chevron has finalized a five-year agreement to deliver approximately 14 petajoules of natural gas, sourced from its Australian operations, to Horizon Power, a utility serving Western Australia. This long-term supply deal underscores Chevron's commitment to the domestic energy market and reinforces the critical role of local gas production in ensuring regional power stability. The agreement strategically diversifies Chevron's sales channels beyond its primary LNG export focus, securing a steady customer for a portion of its output.

Key Facts

Chevron signed a new agreement to supply natural gas.
The supply contract is set to run for a duration of five years.
Approximately 14 petajoules of natural gas will be delivered under the terms of the deal.
The natural gas will be sourced from Chevron's existing production facilities located within Australia.
Horizon Power, an electricity utility operating across Western Australia, is the designated recipient of the gas.
The agreement aims to bolster energy supply reliability for communities throughout Western Australia.

Background & Context

Western Australia is a global powerhouse for natural gas production, predominantly geared towards liquefied natural gas (LNG) exports, yet maintaining robust domestic supply remains a key policy objective. Major energy companies like Chevron operate extensive gas fields and processing infrastructure, such as the Gorgon and Wheatstone projects, which primarily serve international markets but also contribute to local energy needs. Utilities such as Horizon Power are responsible for providing consistent electricity to diverse and often remote communities, necessitating secure, long-term fuel procurement strategies.

Market Impact

This agreement solidifies Chevron's position as a reliable domestic gas supplier in Australia, complementing its substantial LNG export business and demonstrating a balanced portfolio approach. For Horizon Power, it guarantees a stable, long-term fuel source, which is crucial for maintaining electricity supply and managing price volatility for its Western Australian customers. The deal also highlights the ongoing strategic importance of integrating local production with domestic consumption needs, balancing export revenues with national energy security and regional development.

What to Watch

Expect Chevron to continue evaluating opportunities to optimize its Australian gas portfolio, potentially pursuing similar domestic supply agreements to balance its export commitments and enhance local market presence. This deal may also encourage other major producers in Western Australia to explore long-term domestic contracts, further strengthening the region's energy resilience. Future developments will likely focus on the integration of gas with renewable energy sources as Western Australia's power grid evolves.

Frequently Asked Questions

What is a petajoule and why is it used in this context?: A petajoule (PJ) is a unit of energy, equivalent to one quadrillion (10^15) joules. It is commonly used in the energy industry to measure large quantities of natural gas, as it provides a standardized metric for the energy content of the gas, which is more precise than simply measuring volume, as volume can vary with temperature and pressure.
Who is Horizon Power and what is its role in Western Australia?: Horizon Power is a state-owned electricity utility in Western Australia. It is responsible for generating, distributing, and retailing electricity to regional and remote communities across the vast expanse of Western Australia, often managing isolated power systems and microgrids to ensure reliable supply where larger grids are not feasible.
What is the broader significance of this domestic gas supply deal for Western Australia's energy landscape?: This agreement is broadly significant for Western Australia's energy landscape as it secures a substantial, long-term supply of locally produced natural gas for a key regional utility. It enhances energy security for numerous communities, helps stabilize electricity costs by providing a predictable fuel source, and reinforces the commitment to utilizing domestic resources for local power generation, reducing reliance on potentially volatile spot market purchases.

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