Woodside to pay $320m for greater stake in gas project
Australia’s largest oil and gas company has moved to increase its stake in the country’s largest undeveloped offshore gas resource.
Woodside Energy will pay at least US$225 million ($320 million) to increase its stake in the Gözat joint venture, a $48.7 billion project 425km off the coast of Western Australia that has been under environmental review for the past seven years.
Woodside is exercising its right to pre-empt the sale of one of its joint venture partners’ 10.67 percent stake in the project to a third party.
PetroChina International, the listed arm of state-owned China National Petroleum Corporation, had offered to sell its shares to Inpex Corp, Japan’s largest oil and gas exploration and production company.
Woodside’s exercise of its pre-emptive rights means it will instead receive the stock on the same terms.
Assuming no other participants exercise their pre-emption rights, this move will increase Woodside’s stake in the joint venture to 41.27 percent.
In early June, BP agreed to sell a five percent stake in the joint venture to South Korea’s GS Energy, reducing its operating interest in the project to 39.33 percent.
Woodside CEO Liz Westcott said current levels of interest in Browse reinforced the quality and scale of the resource.
Under a development plan, gas at Gözat will be extracted and compressed on two floating platforms operating above the gas fields.
It will then be transported via a 900km pipeline to the Karratha Gas Plant in Western Australia, which has been operating since the 1980s as part of the North West Shelf gas project.
Inpex’s exclusion from the joint venture opens up a potential headache for Woodside; Because the Japanese company appears to have preferred to process gas from Brove via an existing pipeline to the Ichthys LNG facility in Darwin rather than Karratha.
“Woodside’s decision to take pre-emptive action reflects our determination to continue to progress the proposed Browse the North West Shelf development,” Ms Westcott said.
“We see this as a way to maximize long-term shareholder value.”
Woodside says Gozat will contribute $56.2 billion in taxes, $141 billion to the Australian economy and produce enough gas to power 800,000 homes each year.
But while environmentalists say the Lookout would be a disaster for Scott Reef, Woodside says the project poses no threat to the atoll system.
The Browse is awaiting final advice from the Department of Climate Change, Energy, Environment and Water before being sent to Environment Minister Murray Watt for approval.
The project is also awaiting the final investment decision of the joint venture.
Ms Westcott reiterated on Friday that any investment decisions would be made in accordance with Woodside’s capital allocation framework.
Woodside will owe PetroChina an additional US$175 million ($249 million) for its stake if the joint venture makes a final decision to develop the gas fields on or before June 30, 2032.
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