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Woodside to sell part of its stake in Browse gas project

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Woodside Petroleum has struck a $US2 billion ($A1.92 billion) deal to sell part of its stake in the Browse gas project to Japan’s Mitsubishi Corporation and Mitsui & Co.

The Japanese companies will buy a 14.7 per cent stake in the $30 billion liquefied natural gas (LNG) project through their Perth-based joint venture company, Japan Australia LNG (MIMI).

However, Woodside’s fellow joint venture partners in the project, including BHP Billiton, BP, Chevron and Shell, will have to give the nod before the deal can proceed.

If it goes ahead, MIMI will also buy about 1.5 million tonnes of LNG a year from the Browse development for an undisclosed price.

Shares in Woodside surged by $1.28, or 3.7 per cent, to $36.20.

Under the deal, MIMI will take a 16 per cent stake in the East Browse joint venture and an 8.0 per cent interest in the West Browse project.

While MIMI would end up with a 14.7 per cent share in the entire development, Woodside’s interest would fall to 31.3 per cent from 46 per cent.

“This agreement reflects Woodside’s focus on building strategic relationships to capture value from opportunities which build on the company’s capabilities,” Woodside chief executive Peter Coleman said.

Patersons oil and gas analyst Alexis Clark said the deal was a key step towards Woodside making a final decision on proceeding with the project and commercialising it.

“Notwithstanding this positive development the project still has some way to go to reach FID (final investment decision) in 2013 as the joint venture parties need to still determine the site for the LNG facility to process the Browse gas with disagreement over the Kimberley/James Price Point site versus piping the gas to the North West Shelf,” she said.

West Australian Premier Colin Barnett welcomed the deal, saying it was a vote of confidence in the progress of the Browse project.

“By bringing in Mitsui and Mitsubishi, that brings Japanese industry and Japanese energy utilities into the project to the tune of 15 per cent, which is a significant share holding,” he said.

Woodside is the major equity holder and operator of the proposed project off the Kimberley coast.

The project aims to commercialise the Browse joint venture’s three gas and condensate fields – Brecknock, Calliance and Torosa – 425km north of Broome.

Gas and liquids from these fields will be brought to an onshore LNG plant at Browse LNG Precinct, 60km north of Broome.

Woodside in April again pushed back the final decision date for the Browse development, saying it needed more time to consider engineering and design work.

The company and its joint venture partners had planned to make a final decision to proceed with the project by mid 2012, but are now aiming for the first half of 2013.