Woodside, BHP in Scarborough JV

Woodside Petroleum has taken a small step on the potential Scarborough LNG project, signing an agreement with co-owner BHP Billiton to become the operator of any future development and granting the miner an option to increase its share of the project by 10 per cent.

It comes just weeks after Woodside announced a $2.5 billion capital raising to buy a 50 per cent slice of the project from US-base Exxon, in a deal worth $US444 million.

A further payment of $US300 million contingent would be contingent on a final investment decision.

BHP agreed to waive its right of pre-emption to Exxon’s share, consenting to the sale, which is expected to be completed by the end of the month.

Woodside will hold 75 per cent of the project on completion, with BHP holding 25 per cent.

BHP’s option to purchase an additional 10 per cent of the project will expire prior to the end of December 2019 or approval to commence front-end engineering and design work.

Woodside chief executive Peter Coleman said the agreement strengthened joint venture alignment on the project.

“I am pleased BHP has agreed that Woodside will become operator of the Scarborough development,” he said.

“The Scarborough joint venture will now be focused on finalising the development concept prior to entering front-end engineering and design and positioning for final investment decision in 2020.”

Woodside has previously flagged taking gas from the fields, which are located further offshore than most other energy operations, back to the Pluto LNG facility in the Burrup peninsula.

That would potentially provide supply for a second production train.

The business is also considering using the neighbouring Karratha gas plant, part of the North West Shelf Venture, to process gas from the undeveloped Browse fields in the state’s far north.