EXPLORATION

Woodside cools on Timor Sea, Mexico as Browse gains favour

WOODSIDE Petroleum has forecast its oil and gas production will more than double by the end of the decade, but it has also conceded that the Timor Sea Greater Sunrise project and its Gulf of Mexico operations have been giving it serious headaches.

Woodside cools on Timor Sea, Mexico as Browse gains favour

At a lengthy analyst briefing in Sydney yesterday Woodside confirmed that Greater Sunrise would probably stall over maritime boundaries dispute.

“Agreement between Australia and Timor Leste is vital, or [Greater Sunrise] will stall,” said Woodside gas director David Maxwell.

“What does stall mean? It means we won’t spend any more money and… that looks like the most likely scenario.”

Talks between Australia and Timor Leste broke down recently when the two nations could not agree on where to draw their maritime boundary. Greater Sunrise lies in the disputed area.

If a political settlement was reached in the next six weeks the project could be developed and in production by 2010 when a significant ‘demand window’ was forecast to emerge in China.

If development on Sunrise could go no further in the next few months, this window would be missed. An alternative strategy for meeting this key demand period would be for Woodside to focus more on its Browse basin gas fields, Maxwell said.

“Customers are very interested in the Browse project – it is Australian, it is a stable economy and we are coming off the back of outstanding success on the North West Shelf,” he said.

The Browse Basin – located off northern Western Australia – contains the big Scott Reef-Brecknock fields which hold an estimated 20.5 trillion cubic feet of gas and 312 million barrels of condensate. Interests in these fields are Woodside (operator) 50%, ChevronTexaco 16.67%, BP 16.67%, Shell 8.33% and BHP Billiton 8.33%.

Maxwell said Woodside planned three Browse basin appraisal wells in 2005 and would accelerate development studies and marketing intitiatives. Woodside was developing plans to build a new LNG plant on the WA coast, north of Broome to process gas from these fields.

On the nearby North West Shelf Woodside is looking to add to its existing four LNG trains, targeting approvals for Train 5 in early 2005 and start-up by late 2008.

Maxwell said the $25 billion deal signed in mid-2002 to sell gas from its North West Shelf Joint Venture to the Chinese should be finalised by the end of 2004 and it was on track to start supply to China in 2006.

But Woodside said it could soon abandon the Gulf of Mexico unless it soon built up a dominant position in that region.

Strategic planning director Betsy Donaghey said Woodside had a strategy of developing regional hubs based on oil or gas assets that it could use to gain market leverage over wide areas. Its Gulf operations were failing to meet the hub criteria, she said.

“We will either make it work or we will get out,” she said.

CEO Dan Voelte said continued growth of Woodside’s LNG business in Australia and rising oil production from Africa has put the company in a good position to acquire assets and further increase oil and gas production. Asset acquisition would be based on Woodside’s hub strategy.

Woodside shares rose 52 cents yesterday to close at $19.09.

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