Reuters Woodside loses PetroChina deal for Browse project04 Jan...

Reuters

Woodside loses PetroChina deal for Browse project

04 Jan 2010 - 20:07

PERTH, Jan 4 (Reuters) - Woodside Petroleum Ltd has lost a foundation customer for its key Browse liquefied natural gas (LNG) project in Australia after an initial A$45 billion ($40.1 billion) pact to sell gas to PetroChina <0857.HK> expired.

Woodside, Australia's second-largest oil and gas producer, said on Monday the initial deal with PetroChina, signed in 2007 for the potential sale of 2 to 3 million tonnes per year (mtpy) of LNG from Browse project, expired on Dec. 31 and the two parties were not able to reach an agreement to extend the deal.

Perth-based Woodside said, however, a separate agreement with Taiwan's CPC Corp remained in place and that it was also in gas sale talks with Japan's Osaka Gas <9532.T> over other projects, including a potential sale of up to 1.5 mtpy of LNG from the Browse development.

Analysts remain bullish about Asia's demand for LNG in the post-2015 period and said that the lapse of the PetroChina deal was not necessarily a blow to the project.

"Asian demand is very strong and looking at the string of recent deals signed, I doubt Woodside will have problems finding other buyers to take up the 2-3 million tonnes booked by PetroChina," said an energy analyst from a major investment bank.

"Other Chinese buyers may come back to the negotiating table, while Woodside could potentially get a better deal with Osaka Gas or other Japanese customers that already have a long-standing relationship under the North West Shelf project."

China hopes to clinch more deals on liquefied natural gas imports and take advantage of excess supply in the international LNG market now to speed up negotiations of overseas gas purchases, the country's energy head said. [ID:nTOE60303L]

UBS' energy analyst Gordon Ramsay said that should discussions with Osaka Gas and CPC Corp were successful, it would mean that Woodside would lock in between 3.5 to 4.5 mtpa of LNG sales from Browse -- a large chunk of the 6 million tonnes equity gas it needs to sell.