Energy giant Woodside Petroleum has put on hold its multi-billion dollar Browse liquefied natural gas project in view of the challenging market environment.
Energy giant Woodside Petroleum has put on hold its multi-billion dollar Browse liquefied natural gas project in view of the challenging economic and market environment.
Woodside, which holds a 30.6 per cent stake in the project off the Kimberley coast, said the joint venture decided not to progress with the floating LNG development at this time.
The Perth-based company said it had achieved significant cost savings and value enhancements during the project's front-end engineering and design (FEED) phase, but that had been offset by the extremely challenging external environment.
The external challenges include the collapse in oil prices over the past year.
"This decision represents a disciplined approach to large scale capital investment and is consistent with our requirements for a development concept to be commercially robust across a range of scenarios," Woodside chief executive Peter Coleman said in a statement today.
"Woodside remains committed to the earliest commercial development of the world-class Browse resources and to FLNG as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time.
"Accordingly we will use the additional time to pursue further capital efficiencies for Browse."
Woodside said it remained focused on satisfying its commitments under the Browse retention leases, which were renewed in 2015 and run until mid 2020.
Woodside and its joint venture partners, including Shell, BP and PetroChina, selected floating LNG as the preferred development option for Browse in 2013.
That was after Woodside said the cost of building an onshore LNG plant at James Price Point near Broome was commercially unviable.
That option also caused community protests in the Kimberley, with concerns over the impact of an onshore LNG plant on the environment and indigenous heritage.
The shift to FLNG was designed to reduce the cost of developing the giant gas fields, with Woodside flagging the possibility of building three FLNG vessels.
It planned to use the same approach that Shell is using for its Prelude FLNG development. The Prelude FLNG plant is being built in Korea, at an estimated cost of more than $12 billion.
Woodside's decision will be a blow for premier Colin Barnett, who has championed the Browse project, and for the state government's revenue, as it will no longer obtain the expected royalty income.
