Woodside fails to secure $37 billion LNG order from PetroChina

Australian oil and gas exploration and production company, Woodside Petroleum Ltd, has lost a potential $37 billion deal to sell up to 3 million tonnes of liquefied natural gas (LNG) to PetroChina Co from the Browse development project following the expiry of an agreement on 31 December 2009.

In Australia's biggest ever trade deal with China till 2007, the Perth, Western Australia-based Woodside had signed a $37-billion agreement with PetroChina to supply 3 million tonnes of LNG a year from its Browse Basin project, but the agreement expired last week as the Australian company failed to translate that agreement into a firm supply deal.

The Browse project, which will cost around $40 billion to develop, is a joint venture with Chevron Corp, BHP Billiton, British Petroleum and Royal Dutch Shell.

Under the agreement, Woodside was to start supplying gas to PetroChina starting 2013 and the joint venture partners are locked in a dispute as to where to locate the gas processing. The Australian government has now intervened and given a deadline to the partners to settle on a site.
A Woodside spokeswoman said that under the agreement signed with PetroChina, it was not feasible to supply gas starting 2013.

In a statement, the company said, "Woodside and PetroChina have agreed to keep each other informed of progress in their respective LNG export and LNG import projects. Woodside remains in ongoing discussions with other Asia-Pacific LNG customers in relation to potential sales from its portfolio of Australian LNG developments, including the Browse project."

Woodside said that an LNG agreement signed with CPC Corporation Taiwan announced in November 2007 for the potential sale of 2 to 3 million tonnes per annum for a period of 15 to 20 years remains in place.

Woodside has entered into an agreement with Osaka Gas Co Ltd to press discussions in Woodside projects, including for the potential sale and purchase of up to 1.5 million tonnes of LNG per annum from the Browse LNG Development.

In 50 years, Woodside has grown from an oil and gas explorer to Australia's largest independent producer of oil and gas. It operates Australia's largest resources project, the North West Shelf Venture in Western Australia, which produces about 40 per cent of Australia's oil and gas.