Another major player bows out of Browse

ONE of Australia’s most significant resource developments, the controversial Browse LNG project offshore WA, has lost its second major participant after BHP Billiton announced it would sell its stake in the venture. The international resources major announced that it had signed an agreement with China’s largest listed oil company PetroChina International Investment Australia to sell its interest in Browse for US$1.63 billion.
Under the terms of the agreement, BHP will sell its 8.33 per cent stake in the East Browse Joint Venture and its 20 per cent interest in the West Browse Joint Venture to the state-owned company.
The deal is subject to regulatory approval and, should remaining joint venture partners Woodside Petroleum, Royal Dutch Shell, BP, Mitsui and Co and Mitsubishi Corp decline their right to match the offer, completion of the agreement is expected in the first half of 2013.
BHP Billiton chief executive Petroleum J Michael Yeager said the arrangement would benefit both companies, as BHP focussed on its strategic assets and PetroChina looked to break into the WA market.
“This is an excellent opportunity for both companies: PetroChina has acquired an interest in a world-class gas resource and BHP Billiton has exited a non-strategic asset,” he said.
BHP is the second JV partner to pull out of the project after Chevron sold its share last year.
The development of Browse has been widely criticised by environmental groups and Aboriginal landowners, namely due to the selection of James Price Point as the location for the onshore processing plant.
The WA Environmental Protection Authority officially approved Woodside’s Browse proposal in December, describing it as a “derived proposal” which complied with the strictly defined James Price Point
precinct conditions and boundaries. The project still awaits final environmental approval from Federal Environment minister Tony Burke.
BHP’s withdrawal from Browse has already allowed it to focus on other strategic assets, with the company recently announcing a US$520 million investment in the Longford gas conditioning project
(LGCP) in Victoria.
BHP and project operator Esso Australia Resources each have a 50 per cent stake in the Gippsland Basin Joint Venture. Esso Australia, a subsidiary of the ExxonMobil Australia group of companies, will invest $500 million towards the project.
The LGCP will add carbon dioxide removal capacity to the Longford gas plant, which is necessary in the production of gas from the Turrum offshore development project. The LGCP will be designed to process about 400 million cubic feet of gas per day and reduce the carbon dioxide content of treated gas to less than 3 per cent.
Commercial gas production is expected to begin in 2016.
“The Longford gas conditioning plant is a necessary extension of Bass Strait infrastructure to enable valuable hydrocarbon liquids production and domestic gas supply for years to come,” Mr Yeager said.
ExxonMobil Australia chairman John Dashwood said the gas conditioning plant was an important project for the Gippsland region.
“Australian energy consumption will continue to grow during the next 20 years,” he said.
“The gas conditioning plant will process gas to help meet this expected increase in demand. “And because of its cleaner-burning qualities, natural gas is a powerful option for reducing the environmental impact of energy users.”
Esso Australia’s Longford facilities have been operating for more than 40 years, but were originally designed to treat natural gas with a different composition to that of the Turrum field.
BHP Billiton reported that the new plant was needed to condition Kipper Tuna Turrum natural gas to meet quality specifications for its sale into the market.

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