Chevron eyes permit sell-off in Australia's Browse basin
US producer Chevron is set to shake up control of Australia's gas-rich Browse basin as it seeks to offload its exploration permits in the region
Bids for the assets have closed and Chevron is now assessing offers for part or all of its exploration licences in the region, which would mean another re-jig of interests in the area, reported the Australian Financial Review.
The deal highlights the state of change in the country's northwest offshore play, widely seen as crucial to the future of Australia's liquefied natural gas (LNG) export industry.
The basin is host to both Woodside Petroleum's Browse LNG project, Shell's Prelude floating LNG (FLNG) scheme and the upstream portion of Japanese player Inpex's Ichthys LNG venture with France's Total. Plenty of other gas has been found, including Santos' Burnside and Crown finds, as well as ConocoPhillips' discoveries around the Poseidon field.
But the outcome of the deal could help determine the future shape of the emerging LNG scene in the Browse basin, where commercial gas production is yet to begin and exploration wells costs about $100m each.
Chevron is refocusing its attention on its LNG commitments in the Carnarvon basin to the south, where it is developing the Gorgon and Wheatstone LNG project. It is also continuing with an active exploration campaign that has hit 21 finds off Western Australia since 2009. In 2012, it swapped its interest in Woodside's Browse LNG venture for stakes held by Shell in the Carnarvon basin.
The US company's remaining stakes in the basin include a 50% interest in the WA-274-P permit, which hosts the Crown-1 find made in November 2012, estimated to be around 5 trillion cubic feet. It also has a near 25% stake in the earlier Burnside discovery in the WA-281-P permit to the south, also operated by Santos.
Australian independent Santos has publicly suggested that development of the Browse basin will require the various joint ventures with LNG-size resources to collaborate in order to expedite development. The basin lies off the remote northwest coast of Western Australia, and while it is geographically close to thirsty Asian markets, there is little onshore infrastructure to support development, and building the necessary infrastructure will be costly.
Santos has existing relationships with Total, Inpex, ConocoPhillips and Chevron in either Western Australia or the Northern Territory.
Analysts expect bidders for the Chevron stakes could include Shell, Inpex, Total, or Santos, as well as Woodside and any of its Browse LNG venture partners. LNG buyers such as PetroChina and Osaka Gas could also be in the mix.