Chevron Relinquishes Stake in Browse Joint Venture as Part of a Mutually Beneficial Resource Exchange with Shell

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Researched by Industrial Info Resources Australia (Sugar Land, Texas)--Chevron Corporation (NYSE:CVX) (San Ramon, California) and Shell Development Australia, a subsidiary of Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands), have signed an agreement to swap assets, achieving wins for both companies. Chevron has swapped its share of the East Browse and West Browse gas fields in the Browse Basin for Shell's Clio and Acme gas fields in the Carnarvon Basin.

Chevron has fully relinquished its stake in the Browse gas fields and the proposed Browse Liquefied Natural Gas (LNG) project. As part of the deal, Chevron also will receive $450 million from Shell.

The exchange can be seen as a tactic to improve both companies' goals and growth strategy. Shell says the deal will simplify the ownership of the Browse gas fields and satisfy the company's plan for expansion of its natural gas business. Chevron is pleased to take over Shell's 33.3% interests in the two Carnarvon Basin gas fields, and consequentially become full owner of the promising, potentially rich gas resource area. Chevron aims to utilize the resources to bulk up future feedstock for its $29 billion Wheatstone project, which is under development.

"Consolidating our Carnarvon Basin position furthers our progress towards becoming a leading liquefied natural and domestic gas producer in the Asia Pacific," said Melody Meyer, the president of Chevron Asia Pacific Exploration and Production.

Shell has placed a high emphasis on expanding its global equity interest in LNG supply projects. Shell has increased its Browse stake significantly, with the asset exchange to see Shell reach 35% interest holder in the West Browse titles and 25% interest holder in the East Browse titles.

Andy Brown, Shell's Upstream International Director, said in a statement: "The Browse gas fields are a key LNG development opportunity for Australia. We're committed to continue working with Woodside (as operator), the other JV [joint venture] participants and key stakeholders to secure the best possible development plan for this important resource."

Woodside Petroleum (ASX:WPL) (Perth, Australia) is the operator of the 12 million-metric-ton-per-year Browse LNG project, which is expected to have a total investment value of about $40 billion. Woodside Petroleum with Shell and the remaining joint venture partners, BHP Billiton (NYSE:BHP) (Melbourne, Australia), BP Developments (NYSE:BP) (BP plc) (London, England) and Japan Australia LNG (MIMI) (Mitsui & Company and Mitsubishi Corporation), will make a final investment decision on the mega project in the first half of 2013.

It is interesting to note that Woodside's shares grew 2.5% after Chevron announced its departure from the Browse project joint venture team.

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