WA faces a big battle with an aggressive Northern Territory Government to secure the economic benefits of a supply base to service the Browse Basin.
Colin Barnett yesterday soft- ened his long-held opposition to floating LNG, declaring he "accepts the realism" that the Woodside Browse consortium will develop its gas and condensate fields with two or more floating processing vessels, rather than onshore in the Kimberley.
And he issued a rebuke to the Woodside consortium and broader industry, saying he understood why the consortium ditched the James Price Point onshore option for FLNG, though it left his Government "swinging a bit high and dry".
"Sometimes people talk in an Australian context about sovereign risk," Mr Barnett yesterday told 3500 oil and gas executives during the opening session of the Australian Petroleum Production & Exploration Association conference in Perth.
"Well, there is an opposite to that and that is the risk government endures when it pursues (projects) in good faith."
The Premier did not cave in unconditionally, reiterating WA would not sign over two of the seven relevant Browse retention leases unless the consortium delivered a supply base and also provided a domestic gas solution.
Mr Barnett insists the supply base be located in WA, which requires a substantial industry-funded investment at a time when Darwin is fast emerging as the default supply base option on the back of supporting Inpex's Ichthys and Royal Dutch Shell's Prelude developments.
Mr Barnett's demands are backed by his claim that about 15 per cent of the Woodside Browse project's resource is in WA waters - one of the three fields, Torosa, is partly in State waters.
But the consortium and the Federal Government say the WA component is no bigger than 5 per cent.
Gary Gray, who as the Rudd government's Federal resources minister last year signed over the remaining five retention leases, said he welcomed Mr Barnett's acceptance of FLNG but said the onus was now on the Woodside consortium to move as quickly as possible to maximise a window of opportunity in global LNG supply and demand.
It remains to be seen if the Woodside venture pushes ahead with the project's development even without State support. Woodside would not discuss Mr Barnett's attack other than to reaffirm it was working with the State Government.
Woodside has flagged a move into front-end engineering and design work in the second half of this year to be in a position to make a final investment decision late next year.