Woodside Petroleum has struck a $2 billion deal to sell part of its stake in the proposed Browse LNG development, in a move that will add to speculation the gas will be piped to the North West Shelf venture rather than processed in the Kimberley.
The new investor in Browse is Japan Australia LNG (MIMI Browse) Pty Ltd, which is jointly owned by Japanese companies Mitsui & Co and Mitsubishi Corporation.
Its investent brings the ownership of the Browse joint venture more closely into alignment with the ownership of the North West Shelf venture.
Woodside is the major equity holder and operator of the proposed Browse development, which seeks to commercialise the joint venture's three massive gas and condensate fields, at Brecknock, Calliance and Torosa, 425km north of Broome.
The current plan is to pipe the gas to a new onshore LNG plant, to be built at James Price Point 60km north of Broome.
However that plan has attracted vigorous opposition from a variety of indigenous, environmental, community and tourism industry groups, and led to speculation the joint venture will process the gas at an existing LNG plant.
The rising cost of 'greenfields' LNG projects has only added to the speculation.
The proposed MIMI deal will see it acquire a 14.7 per cent stake in the Browse development, while Woodside's interest would fall from 46 per cent to 31.3 per cent.
The other joint venture partners involved with Browse - BHP Billiton, BP, Chevron Australia and Shell Development Australia - have a period to consider pre-emption over the sale.
The six Browse owners under the new structure are the same groups that jointly own the North West Shelf venture, where each has a 16.67 per cent stake.
The ownership alignment would make it easier for the two joint ventures to negotiate a commercial agreement to process Browse gas through the North West Shelf venture's Karratha gas plant.
Premier Colin Barnett said in a statement "there could be some further adjustment of project equity shares before the joint venture structure was finally settled".
Mr Barnett, who has been a strong backer of the James Price Point option, said the MIMI deal was a positive signal.
“There is no doubt that this announcement is a vote of confidence and a major step forward for the Browse project and the development of a gas precinct at James Price Point,” he said.
Woodside also announced today it has accepted an offer for a long-term sales and purchase offer from MIMI for about 1.5 million tonnes of LNG a year from the Browse development subject to completion of the equity offer.
Woodside said that while the price agreed by the parties was confidential, it was in line with traditional Asian pricing for conventional LNG projects.
Woodside chief executive Peter Coleman said the company had also entered into a non-binding memorandum of understanding with MIMI's ultimate parent companies, Mitsui & Co and Mitsubishi Corporation, which paves the way for more potential alliances on other projects around the world.
"This agreement reflects Woodside's focus on building strategic relationships to capture value from opportunities which build on the company's capabilities," he said.
