browse activity

Bhp dispose of minority interest in Browse to focus on long life projects.PetroChina Buys BHP’s Browse Project Stake for $1.63 Billion
James Paton and Aibing GuoDec 11, 2012 6:18 pm ET
(Updates to add analyst comment in fourth paragraph.)

Dec. 12 (Bloomberg) -- PetroChina Co., Asia’s biggest oil producer, agreed to pay BHP Billiton Ltd. $1.63 billion for its holding in Woodside Petroleum Ltd.’s proposed Browse liquefied natural gas project in Western Australia.

PetroChina will acquire an 8.33 percent stake in the East Browse joint venture and a 20 percent share of the West Browse venture, Melbourne-based BHP said today in a statement.

The deal comes as Chinese oil and gas acquisitions reached a record this year, following Cnooc Ltd.’s $15.1 billion bid for Nexen Inc. It gives PetroChina a share in natural gas resources off the Australian coast that may underpin an LNG venture estimated by Deutsche Bank AG to cost A$44 billion ($46 billion). The Chinese state-owned company wants half its oil and gas output to come from overseas by the end of the decade.

The purchase confirms “China’s intensifying interest for natural gas imports,” Gordon Kwan, head of energy research at Mirae Asset Securities HK Ltd., said in an e-mail response to questions. “Expect more such deals and they will gain speedy regulatory approvals as they are minority stakes.”

China’s energy use is projected to rise 16 percent to 124.2 quadrillion British thermal units by 2015 from 2011 levels, according to the U.S. Energy Information Administration.

Growing Appetite

Excluding today’s accord, Chinese companies had announced $25 billion of oil and gas acquisitions this year, the most since at least 2007, according to data compiled by Bloomberg.

The appetite for oil and gas assets among Asia-Pacific companies is growing after energy demand in the region grew at more than double the world average of 2.5 percent last year. Before today, purchases this year by China Petroleum & Chemical Corp., Cnooc, Malaysia’s Petroliam Nasional Bhd and India’s Oil & Natural Gas Corp. already took the region’s total to a record $99 billion, tying with the U.S. for the first time.

PetroChina is planning to invest at least $60 billion this decade in global oil and natural gas assets to increase the share of overseas output to half of its total by 2020, Chairman Jiang Jiemin said in March. The company said in August it’s looking at assets in Central Asia, east Africa, Australia and Canada, with President Zhou Jiping telling reporters at the time he’s “completely confident” of achieving that goal.

Mao Zefeng, a PetroChina spokesman, didn’t answer calls to his office today outside business hours.

Resource Boost

Woodside, Australia’s second-biggest oil and gas producer, plans to make a decision next year whether to go ahead with Browse at a site in the Kimberley wilderness region. Royal Dutch Shell Plc and BP Plc are also partners in the project.

The Perth-based company in February boosted estimates for its gas resources in the Browse Basin by 17 percent to 15.5 trillion cubic feet.

PetroChina and Shell own Australia’s Arrow Energy Ltd., which plans an LNG development in Queensland state.

China Petrochemical Corp., or Sinopec Group, is a partner in a A$23 billion LNG project led by ConocoPhillips and Origin Energy Ltd. in Queensland, while China National Offshore Oil Corp. agreed last month to pay BG Group Plc $1.93 billion to increase its stake in another Queensland LNG project.

Mitsubishi Corp., Japan’s biggest trading company, and Mitsui & Co. agreed earlier this year to buy a 14.7 percent stake in Browse for $2 billion. The Mitsui and Mitsubishi venture, Japan Australia LNG Pty, also agreed at the time to buy about 1.5 million metric tons of LNG annually from Browse.

BHP’s minority interest in Browse fell outside its strategy of owning and operating “large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market,” the world’s largest mining company said in an e- mail response to questions. “The sale of Browse realizes an opportunity to exit at an attractive valuation.”

--With assistance from Elisabeth Behrmann in Sydney. Editors: Andrew Hobbs, Edward Johnson