Woodside sees new momentum on long-delayed Browse gas project

Browse is seen as a key source of growth for Woodside but has been stuck on the drawing board for years as plans for onshore and FLNG development estimated at US$30 billion to US$45 billion were scrapped.

The plan now is to develop the giant gas field to feed the North West Shelf plant, Australia’s biggest LNG plant, when its current gas source runs dry in the 2020s.

“We’ve picked up momentum over the last couple of months around Browse and some of it is now a realisation, in particular on behalf of the North West Shelf partners, that Browse needs to be the anchor tenant for the North West Shelf over the next 25 years,” Woodside CEO Peter Coleman said.

The NW Shelf joint venture partners “are very much aligned now” on completing tariff talks “by the end of the second quarter”, he said.

Woodside’s North West Shelf partners are BP, BHP Billiton, Chevron Corp, Royal Dutch Shell and Japan’s Mitusbishi Corp and Mitsui & Co.

Once the tariff is set, Woodside and its Browse partners – most of which overlap with stakeholders in the North West Shelf – will be in a stronger position to move ahead with planning how to develop the field. A final investment decision could come earlier than the current target of 2021.

“The opportunity for us is to bring that forward to be able to meet market — general consensus now says the market’s going to be short by 2021,” Coleman said.

Just two years ago, the market had been expected to remain in oversupply until around 2023, but that has changed following a sharp jump in gas demand in China.

Woodside is also pushing ahead with an oil project off Senegal, where its partners are Cairn Energy and FAR Ltd , while a dispute with FAR over Woodside’s acquisition of a 40% stake in the project enters arbitration.

Cairn and FAR have said the first phase of the SNE development is expected to cost around $3 billion, however Woodside is looking to cut that cost by “quite a lot”, Coleman said.

It has invited offers for a floating production storage and offloading vessel (FPSO) and other equipment for the project.

Woodside reported a 30% rise in first-quarter revenue to US$1.17 billion from a year earlier on increased output and higher LNG prices.

Output rose to 22.2 mmboe from 21.4 mmboe in the March quarter last year, helped by a ramp-up in production at the Wheatstone LNG project, run by Chevron, in Western Australia.

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