Woodside's $30b Browse project under a cloud
A Woodside spokesman on Thursday would not comment on an unsourced report in The Australian Financial Review that it had advised the federal and West Australian governments that the project was not financially viable.
A spokesman for WA Premier Colin Barnett, who has strongly supported an onshore processing plant, declined to comment.
Mr Barnett told the WA Parliament during question time that he had "not received advice to that effect from the joint venture partners at all" and that he was in continued talks with Woodside.
The report said Woodside could release a statement as early as Friday, and that the oil and gas giant had told construction workers to stand down from their work.
The decision could still leave open the construction of an offshore floating vessel to process the gas, which has reportedly been favoured by one of the project's partners, Royal Dutch Shell.
Other partners to the venture include BP, Japanese consortium Mitsubishi and Mitsui, and PetroChina.
Woodside had been due to release its decision on the gas hub, which would have been built at James Price Point near Broome in the Kimberley region, by the end of June.
The new federal Resources Minister, Gary Gray, had to clarify suggestions in March he was in favour of offshore processing, saying he would not comment on Browse after he had spoken in support of the development of floating technologies.
In contrast, Mr Barnett has said he would not support the venture unless it was constructed onshore, amid concern that jobs and economic benefits could be lost.
Last year, mining giant BHP Billiton said it was divesting its stake in the gas venture, less than four months after Chevron had sold its share of Browse.
The environmentally sensitive Browse site is estimated to hold about 13.3 trillion cubic feet of gas.
Frequently Asked Questions about this Article…
The Browse LNG project is a proposed $30 billion gas development led by Woodside Petroleum that would process gas from the Browse field. The proposed onshore gas hub was planned for James Price Point near Broome in Western Australia’s Kimberley region. The Browse area is estimated to hold about 13.3 trillion cubic feet of gas.
Uncertainty stems from an unsourced report in The Australian Financial Review saying Woodside may shelve onshore plans because the project was not financially viable. Woodside declined to comment on that report, the WA Premier said he had not been formally advised, and there were reports that construction workers had been told to stand down. All of this has left the project’s direction unclear.
Onshore processing would build a permanent gas hub at James Price Point to process LNG on land, while an offshore floating vessel would process gas at sea using floating LNG technology. The offshore floating option has reportedly been favoured by partner Royal Dutch Shell, while onshore processing has been strongly supported by WA authorities because of local jobs and economic benefits.
According to the article, project partners include Woodside Petroleum, Royal Dutch Shell, BP, and a Japanese consortium made up of Mitsubishi and Mitsui, as well as PetroChina. The article also notes that BHP Billiton divested its stake last year and Chevron sold its share earlier.
WA Premier Colin Barnett has strongly supported building the project onshore and said he would not back the venture unless it was constructed onshore because of concerns about jobs and economic benefits. Federal Resources Minister Gary Gray has been more open to floating technologies but said he would not comment specifically on the Browse project.
The article reports that BHP Billiton said last year it was divesting its stake in the gas venture, and Chevron had sold its share earlier. Such partner divestments can signal shifting commercial views among major resource companies, which is something investors watch as it may affect the project's financing, timing and risk profile.
Investors should look for an official statement from Woodside (the article said one could be released soon), formal advice to government leaders, announcements from joint venture partners, and changes in on-site activity such as reports of construction workers being stood down. These indicators would clarify whether onshore plans are being abandoned or an offshore option is pursued.
If the project shifts from onshore to offshore processing, WA leaders warn it could reduce local jobs and economic benefits that an onshore hub would bring. For Woodside shareholders, the chosen development option will affect project costs, timelines and potential returns—information investors will need from official company announcements to reassess investment implications.
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