BHP Billiton Pulls Out Of Browse LNG Project

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Researched by Industrial Info Resources Australia (Perth, Australia)--The Browse Liquefied Natural Gas (LNG) Project is back in the news again as BHP Billiton Limited (NYSE:BHP) (Melbourne, Australia) became the most recent major player to finalize the sale of its stake in the controversial project. As of June 7, 2013, BHP Billiton's 8.33% share of the East Browse Joint Venture and 20% share of the West Browse Joint Venture have been sold to PetroChina International Investment (Australia) Pty Limited, a subsidiary of PetroChina Company Limited (SHA:601857) (Beijing, China), China's largest oil & gas producer and distributor. The sale is reported to be worth $1.63 billion (AUD$1.73 billion).

The East Browse Joint Venture and the West Browse Joint Venture are collectively referred to as the Browse LNG Project.

The project, led by Woodside Petroleum (ASX:WPL) (Perth, Australia), has been plagued with problems from the start, including native title issues, environmental approvals, government red tape and community protests. Many of the issues have been related to the proposed land-based LNG production facility at James Price Point, north of Broome, Western Australia. As a result, the project was shelved earlier this year.

Woodside is now investigating the possibility of developing the Browse gas fields through the use of a floating LNG (FLNG) facility. Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) is pioneering the development of this technology at its Prelude FLNG project, also along the Western Australian coast. The Prelude project is a global first, and if it proves to be successful, it will likely see many more gas fields that were previously too small or too far from landfall to be feasible developed through the use of FLNG.

BHP is not the first major shareholder to back out of the Browse LNG Project. Industrial Info reported in August 2012 that Chevron Corporation (NYSE:CVX) (San Ramon, California) had relinquished its stake in the project through an asset swap with Shell. The deal saw Chevron take ownership of Shell's assets in the Carnarvon Basin, and Shell increased its share in the Browse LNG project--something that industry commentators at the time believed was an early signal of the increased likelihood of Browse being developed offshore.

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