Woodside Pertroleum Limited announced Wednesday that the joint venture for the Browse floating liquefied natural gas (FLNG) project offshore Western Australia (WA) will not to proceed with the development, citing the existing economic and market environment for the decision after completing the front-end engineering and design (FEED) work.
The Browse FLNG operator said an extremely challenging external environment negated the impact of FEED work that had focused on delivering targeted cost savings and value enhancements.
“We have undertaken a comprehensive and rigorous process to assess all elements of the development. The decision represents a disciplined approach to large-scale capital investment and is consistent with our requirements for a development concept to be commercially robust across a range of scenarios," Woodside CEO Peter Coleman said in the press release.
“Woodside remains committed to the earliest commercial development of the world-class Browse resources and to FLNG as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time," he added.
Woodside intends to leverage on the high quality work on the Browse FLNG project that has been delivered, including the involvement of the WA Government to agree key principles for domestic gas and supply chain arrangements and the WA and Commonwealth Governments to manage maritime boundary changes.
The joint venture remains focused on satisfying its work program commitments under the Browse retention leases, which were renewed in 2015. The current term of the leases ends in mid-2020. Woodside will now work with the Browse Joint Venture participants to prepare a new work program and budget to progress development activities.
“Accordingly, we will use the additional time to pursue further capital efficiencies for Browse,” Cole said.
Woodside holds a 30.6 percent participating interest in the Browse resources, amounting to 2C share of 4.9 trillion cubic feet of dry gas and 142.6 million barrels of condensate. Shell holds 27 percent stake in the project, while BP, Japan Australia LNG and PetroChina hold interest of 17.33 percent, 14.4 percent and 10.67 percent, respectively.
The latest decision by the Browse FLNG project partners came earlier than expected. In January, Woodside has indicated that FEED work was progressing ahead of a final investment decision in the second half of this year
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