Woodside Petroleum is likely to replicate the ownership structure of its North West Shelf (NWS) operations at the planned Browse project although it may exclude Shell, an analyst says.
Fat Prophets industrial analyst Greg Fraser said it was probable that Woodside would decide to pipe gas south from the Browse fields in Western Australia’s Kimberley region over some 1,000 kilometres to the NWS facilities in the Pilbara.
Mr Fraser said it was unlikely Shell would want a bigger slice of Browse, considering it was selling down its shareholding in Woodside.
More likely parties were BP and France’s Total, which was seeking to increase its interest in the Inpex-led Ichthys liquefied natural gas (LNG) project, “although Total is not involved in either Browse or the North West shelf, which complicates things a bit more”, he said.
“Would it be better to line up Chevron, BP and BHP, as well as the Japanese and say ‘let’s replicate the North West Shelf, except for Shell?”
Woodside on Friday said it was considering selling down its interest in the $US30 billion ($A28.32 billion) Browse LNG project but intended to retain operatorship.
It denied media speculation that it may offload a major stake.
Woodside said it had received significant interest from several parties about taking a share of its stake, so it was conducting a limited process to assess the potential sale of a small part of its 50 per cent interest.
The company had not made any decision at this stage, it said.
Media reports on Friday suggested Woodside could reduce its interest to as little as 16.6 per cent, the same stake as it has in the NWS, which it operates.
The other five NWS joint venture partners – BHP Billiton, Shell, BP, Chevron and Mitsubishi/Mitsui’s MIMI alliance – also have 16.6 per cent each.
At Browse, BHP Billiton and Shell hold 8.3 per cent each, while BP and Chevron each have 16.6 per cent.
Mr Fraser said Woodside must be seriously considering alternatives to processing Browse gas at James Price Point near Broome, given the site had proved a highly controversial choice among conservationists and some indigenous groups.
Piping Browse gas to the NWS would be easier because James Price Point would be a greenfields development whereas the NWS was already a gas precinct, with Woodside’s neighbouring Pluto project about to start production.
Mr Fraser said Woodside chief executive Peter Coleman, who had not yet joined the company when James Price Point was selected, had shown his conciliatory skills by resuming talks with the East Timor government on the stalled Sunrise LNG project.
“Peter Coleman is on a big diplomatic rescue mission with Sunrise so he’s probably doing the same with Browse,” Mr Fraser said.
“It seems quite attractive to forget about the hard road in developing James Price Point and all the environmental baggage that goes with that and consider the economics of putting the gas a little bit further down the country straight into the North West Shelf.”
Woodside in December said a final decision to proceed with Browse would likely be delayed by up to a year.
Shares in Woodside were up 51 cents at $34.48 on Friday.
WA Premier Colin Barnett said the Browse project was massive, with estimates of up to $40 billion to build it.
“It’s therefore logical that you will get a broader spread of ownership in the project,” he said in a statement.
“At the end of the day I don’t believe Woodside by itself could carry 50 per cent of such a large project.”
Mr Barnett said the Chinese had made it clear to him they would like to be involved as equity partners in the project, with a shareholding of up to 25 per cent.
“These discussions are commercial and they need to continue and they are being encouraged by the state government.”
Mr Barnett said that over the past year he had actively encouraged Chinese involvement in the project as a customer and as an equity investor.
There may also be scope for further Japanese, Indian or other involvement, he said.