“Woodside remains committed to the earliest commercial development of the world-class Browse resources, but the economic environment is not supportive of a major LNG investment at this time”, Woodside chief executive Peter Coleman said in a statement on Wednesday.
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The oil and gas company and its joint venture partners were scheduled to make a final investment decision on the offshore floating LNG project in the second half of the year. Focus will remain on work program commitments under the Browse retention leases, which were renewed in 2015, with current term of the leases ending in mid-2020.
Australia’s largest resources project – Chevron’s US$52 billion Gorgon liquefied natural gas (LNG) project off Australia’s northwest coast – began shipping this week after months of delays and cost overruns. “Accordingly, we will use the additional time to pursue further capital efficiencies for Browse”.
The abandonment of the venture comes at a time when last year, the energy company experienced a decline of about 99% year-over-year (YoY) in its full-year profits.
West Australian Premier Colin Barnett, who has championed the Browse development near Broome, said the prospect of piping gas to North West Shelf was not realistic.
‘When the price gets better they’ll have another look at it, ‘ he said.
“I’m disappointed that Woodside has basically shelved the project”, Mr Barnett said. Woodside and partners in late 2013 made a decision to push ahead with unproven floating technology and undersea development to produce LNG and in the middle of a year ago agreed on the front-end engineering and design phase of the project.
Brent Crude oil is trading around $US41.50 a barrel, but despite a recent uptick in price analysts say a significant recovery is some way off.
The JV now has plans to work together to prepare a new work program and budget to progress development activities.
More than US$400 billion of proposed energy projects have been delayed since the middle of 2014 and pushed into next year and beyond as oil prices slid about 60 percent in the past two years, consulting firm Wood Mackenzie Ltd said.
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Woodside shares were 33.5 cents, or 1.22 per cent, lower at $27.03 at 1530 AEDT.
