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LNG project will not offer stake to CPC, PetroChina

Woodside Petroleum Ltd, operator of the proposed Browse liquefied natural gas (LNG) project in Australia, said it intends to exclude the venture's customers from taking equity stakes.

A share "is not offered at this time" for either Taiwan's CPC Corp, Taiwan (CPC, 台灣中油) or PetroChina Co (中國石油天然氣), Chief executive officer Don Voelte said yesterday in Sydney, citing market conditions that favor LNG producers over buyers. CPC would like to take an ownership stake "if we have the opportunity," said Chairman Wenent Pan (潘文炎).

Perth-based Woodside and CPC yesterday held a ceremony in Sydney to mark the signing in November of an accord for the sale of as much as A$45 billion (US$42 billion) of LNG from the Browse project.

"The current market supply- demand doesn't force sellers to do that at this point," Voelte told reporters in Sydney. "These are huge, huge projects, they're extremely costly. Frankly, you have to keep all the equity you can to support that type of capital investment."

Taiwan forecasts LNG demand will rise to 10.5 million tonnes in 2010 up 28 percent from last year, after construction of additional gas-fired generators. CPC will spend between A$35 billion and A$45 billion for between 2 million and 3 million tonnes annually of LNG over 15 to 20 years from the Browse project off Australia's northwest coast.

The venture is due to make a decision in 2010 whether to proceed with the project, with LNG deliveries due to start between 2013 and 2015. Woodside is scheduling two similar decisions before then, for an expansion of the Pluto project by the end of this year and for the Sunrise project in the Timor Sea next year.

Woodside could transfer the agreement to sell LNG to CPC and PetroChina to the Pluto or Sunrise ventures if required, Voelte said.

"Both of these key terms agreements have elements in the agreement that allow Woodside and the party to make sure they get supply," Voelte said. "They could be supplemented or added to by other projects that we have."

A final gas sales contract should be concluded within two years, Pan said. The exact pricing terms for the LNG still need to be determined, based on "indicative ranges" included in the existing accord, Voelte said.

Taiwan may seek to buy more LNG from Australia in addition to the Browse accord, Minister of Economic Affairs Steve Chen (陳瑞隆) said.
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