Browse under cloud as Chevron quits
UPDATE 8.35am: Chevron has sparked fresh speculation about the future of the Woodside-led $40 billion Browse LNG project, announcing late last night it would swap its 16.7 per cent share of the troubled venture with Royal Dutch Shell.
Shell will pay Chevron $450 million and swap its 33.3 per cent interests in the Clio and Acme gas fields in the Carnarvon Basin near Onslow, in return for Chevron's Browse Basin titles.
This will give Chevron a 100 per cent interest in the WA-205-P and WA-42-R blocks, where it has had success in drilling and may provide gas for an expansion of its $US29 billion ($28 billion) Wheatstone LNG development near Onslow.
Woodside this morning confirmed the transaction, saying it had agreed to waive its pre-emption rights over the sale.
"The value of the consideration, as determined by Shell and Chevron, is commensurate with the consideration agreed to be paid by Japan Australia LNG (MIMI Browse) to acquire an interest in the Browse joint ventures from Woodside in the transaction announced by Woodside on May 1," Woodside said.
The company said it would remain the operator of the project despite the transaction.
Chevron tried to paint the move as shoring up Wheatstone stocks, rather than a vote of no-confidence in the controversial Browse project near Broome which is opposed by environmentalists and has suffered cost blowouts and delays.
The head of Chevron's Australian unit, Roy Krzywosinski, described the move as strategic.
"It allows us to consolidate our Australian portfolio and . . . creates future expansion opportunities for the Wheatstone project," he told WestBusiness last night.
"We have still got some more work to do (there) to continue to move ahead with the two trains and consolidate and look for additional resources to help underpin expansion, but this will help us to get closer to that goal. We see this as a great opportunity for us."
Chevron retains exploration rights in other parts of the Browse.
Shell was similarly upbeat, despite the question marks the move placed over the venture, including whether Shell was looking to bulk up its current 9.3 per cent Browse stake for an eventual sale or greater leverage in the venture.
Andy Brown, upstream international director for Shell, said the swap was consistent with the company's policy to seek greater stakes in projects.
"The Browse gas fields are a key LNG development opportunity for Australia," he said.
"We're committed to continue working with Woodside (as operator), the other JV participants and key stakeholders to secure the best possible development plan for this important resource."
The Browse partners, subject to Government approval of last night's swap, now include Woodside, Shell, BP, BHP Billiton and Mitsui-Mitsubishi.
They are said to be split over whether to process Browse gas at James Price Point or at cheaper existing facilities in Karratha.
Shell's Australian chief Ann Pickard has warned Australia is becoming too costly.
A final investment decision on Browse is not expected until the first half of next year, assuming the project is viable.
