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Oil & Gas

BP scales up, Shell is out: Supermajors realign on Aussie mega-gas project

UK supermajor BP has agreed to buy compatriot rival Shell’s 27% interest in Woodside Energy’s Browse joint venture in Australia, which is looking to exploit the Browse offshore fields as a US$20 billion mega-gas project.

If this deal completes, then BP’s stake in Browse — the nation’s largest undeveloped gas resource — would increase to 44%, overtaking operator Woodside’s 30.6% share. Neither BP nor Shell has commented on the price of their proposed transaction, which is subject to regulatory approvals.

Browse encompasses the long ago-discovered Calliance, Brecknock and Torosa offshore fields that have combined resources of about 20 trillion cubic feet of gas.

Woodside has touted gross annual production of 11.4 million tonnes of liquefied natural gas, liquid petroleum gas and domestic gas from Browse.

The three fields, located off Western Australia’s Kimberley coast, contain up to 12% carbon dioxide and a carbon capture and storage/reinjection scheme is expected as part of any ultimate project. Condensate will also be produced from the liquids-rich asset.

“BP believes development of the Browse gas resources could make a significant contribution to energy security in Australia and to the Asia Pacific region,” a BP spokesperson said.

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Development options have been evaluated for years but the concept now on the table has the Browse fields being brought on stream to replace declining feed gas volumes from ageing mature fields at the Woodside-operated North West Shelf LNG project.

Upstream last month reported that Browse could — once again — move into the front-end engineering and design phase later this year ahead of the final investment decision being taken in 2025.

The facilities required this time around include two floating production, storage and offloading vessel and a 900-kilometre gas pipeline to the NWS plant.

BP and its partners continue to assess development options, with the preferred concept being a tie-back to the NWS onshore gas processing facilities at Karratha, BP echoed on its website.

“This is a technically and commercially complex development and the joint venture is completing the work necessary to move into project execution,” the company said.

Back to the drawing board

In July 2015, the Browse co-venturers had moved into FEED for Browse that at the time was envisaged as a floating LNG project based on Shell’s FLNG technology.

The other Browse partners are Mitsubishi-Mitsui on 14.4% and PetroChina on 10.67%. In 2012, the Japanese companies together paid US$2 billion for their interest, while PetroChina stumped up US$1.63 billion for its interest, Reuters reported.

On Saturday, Shell Australia said it had agreed to sell its stake in Browse as the “asset is no longer a strategic fit in the context of Shell’s global portfolio”, explaining it regularly assesses its portfolio to “inform capital allocation and maximise returns and performance”.

Shell added that Browse remains an important Australian resource which, if developed, would “provide much needed energy to customers as the energy market transitions towards lower-carbon energy”.

BP, Shell and Woodside are also stakeholders in the NWS LNG plant alongside Chevron and Japan LNG (MiMi).

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