wpl says has made best offer for gas for pluto

Woodside says has made best offer for gas for Pluto


Mon Oct 19, 2009 9:02pm EDT

By Rob Taylor

CANBERRA, Oct 20 (Reuters) - Woodside Petroleum Ltd (WPL.AX), has made its best offers to buy gas for the expansion of its $11 billion Pluto project, but is "ambivalent" whether other companies come onboard, its chief executive said on Tuesday.

Australia's No.2 oil and gas firm has sufficient gas reserves for the first processing train at the Pluto liquefied natural gas project in western Australia, but not enough currently to feed planned expansion to a second or third train.

"I think we're at a point where some of these companies have to decide if they want to go with a greenfield opportunity many years later at (rival Chevron Corp's ) Wheatstone project, or pay us a premium for a brownfield many years earlier," Chief Executive Officer Don Voelte told Reuters during a visit to Australia's parliament.

"Frankly, we've given our best offer, and I'm ambivalent about it."

Woodside has been looking to aggressively expand Pluto and cement its place as a major player in natural gas, global demand for which is forecast to increase by roughly 50 percent by 2030, according to the International Energy Agency.

But Woodside faces tough competition from Chevron (CVX.N), which in addition to Wheatstone also runs the $37 billion Gorgon LNG project in Australia. Chevron and its partners have already contracted to sell Gorgon gas to buyers from India, China, Japan and South Korea.

Chevron is moving ahead with Wheatstone, tapping an estimated 4.5 trillion cubic feet of natural gas, and expects to start shipments in 2016. It has said it would seek additional gas from operators of neighbouring fields.

Some analysts have said that Pluto may have an advantage over Wheatstone, which is not expected to produce gas until about five years after Pluto comes onstream.

U.S. energy firm Apache Corp (APA.N) and Hess Corp (HES.N) have said that they are in talks with Woodside to sell their gas to feed Pluto's expansion.

Voelte said Woodside could find its own gas from around 50 wells being drilled over the next three years if it could not buy from others.

"I'm sure we'll find gas for the trains that we need. We've given the very few selected folks out there offers to join us. But I'm not plussed one way or the other," he said.

Gorgon, he said, had actually provided a boost to Woodside, cementing the importance of Australia's Northwest Shelf producing region and allowing Woodside to schedule train development between Gorgon's.

Voelte would not say if the company was exploring project mergers with its international rivals.

"I don't think about it, I don't worry about it," he said. "Frankly, we're very, very confident."

Besides Pluto, Woodside is also planning to build two other LNG terminals in northwestern Australia, Browse and Sunrise, and it has plans to increase its LNG production tenfold to 20 million tonnes a year by 2020. ($1=1.076 Australian Dollars) (Additional reporting by Fayen Wong in PERTH, editing by Jonathan Standing)