Woodside loses foundation Browse LNG customer

Woodside Petroleum Ltd. lost a foundation customer for its proposed Browse LNG project following the Dec. 31, 2009, expiry of an agreement to sell as much as 3 million tonnes/year of LNG to PetroChina Co. Ltd.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Jan. 8 -- Woodside Petroleum Ltd. lost a foundation customer for its proposed Browse LNG project following the Dec. 31, 2009, expiry of an agreement to sell as much as 3 million tonnes/year of LNG to PetroChina Co. Ltd.

In September 2007, amid huge publicity, PetroChina signed a “key terms agreement” to become a foundation customer for the Browse project. The supply arrangement would have been worth $45 billion (Aus.). However, the targeted supply date of 2013-15 is no longer achievable. Start of gas production is not expected before 2016.

Woodside and PetroChina agreed to keep each other informed of progress in respective LNG export and LNG import projects, but the loss is a blow particularly as ExxonMobil Corp. signed a 20-year, 2.25 million tpy deal to supply PetroChina from its share of Gorgon project LNG from 2014.

Nevertheless, Woodside said a key terms agreement with Taiwan’s Chinese Petroleum Corp. for Browse LNG, struck in November 2007, remains in place, and it is continuing good faith negotiations with CPC on a detailed supply agreement.

Woodside added it has entered an agreement with Osaka Gas to progress talks on the company’s projects, including the potential sale of up to 1.5 million tpy of Browse LNG.

Analysts suggest the demise of the PetroChina deal may not be a real problem as it enables Woodside and its Browse joint venture partners the option to secure better deals with other Asian buyers.

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