Woodside remains upbeat despite 'modest' output forecast
Woodside Petroleum has defended its lower-than-expected forecast for output in 2014, blaming a decline in domestic gas sales and maintenance shutdowns.
Output in 2014 is forecast at 86 million to 93 million barrels of oil equivalent, a modest rise from the 2013 output of 86-88 million barrels of oil equivalent.
"This increase may be below some analyst expectations," chief executive Peter Coleman said. The shortfall is due to the expiry of sales contracts of some low-margin domestic gas, as well as planned maintenance at the North-West Shelf processing plant.
Some of these units should have been shut down for routine maintenance a few years ago, Mr Coleman said, but work was deferred, with the group now moving back to a regular maintenance program.
Negotiations are continuing for the planned Leviathan export gas project in Israel, amid speculation local partners in the project want to pipe gas to Turkey, rather than liquefy the gas for shipping, where Woodside has expertise.
"There is still opportunity for Woodside to create considerable value for the joint venture," Mr Coleman said.
Marketing was under way for gas to be sold from the large Browse project off Western Australia, he said, and he visited Japan recently to meet prospective customers, amid speculation that north Asian buyers are seeking to force down gas import prices, which are linked to the oil price.
"It is too early to say how much is sold," Mr Coleman said of the Browse talks.
Woodside said spot gas prices in northern Asia had risen with "a tightening market that should prevail for the next several years". Domestic media reports in Japan recently state the spot price has risen 30 per cent since May to nine-month highs of about $US18 ($19.80) per million British thermal units.
The rise reflects a rundown in stocks against the backdrop of strong demand not only from Japan, but also in South Korea and China, according to the reports.
Mr Coleman said further exploration around the Laverda reserves is needed so an economic option could be pursued for its potential development.
Along with the recent success in acquiring acreage in New Zealand, Woodside has acquired additional exploration acreage off the west coast of Ireland.