Woodside seeking US$5B investments in projects globally
Handout/ WoodsideWoodside's Pluto LNG Loading jetty, Pluto LNG onshore gas plant.
Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, is looking to make investments of about $5 billion in projects globally as development costs at home remain high.
“I’d like more $5 billion projects for Woodside,” Chief Executive Officer Peter Coleman said today in an interview in Brisbane, where he’s attending an industry conference. “When you look at the size of the company and our ability to execute, a $5 billion equity share is a sustainable and comfortable number for us and it also builds wealth at a good pace.”
Woodside is expanding overseas and lodged its interest in April in developing a liquefied natural gas project on the coast of British Columbia as Australia’s industry struggles with rising costs. The Perth-based energy company scrapped a plan last month to build the Browse LNG project at a site on the Western Australia coast because it was too expensive at an estimated cost of about $45 billion.
“Coleman recognizes that he’s there to grow the company, it’s just a question of time,” John Hirjee, a Melbourne-based energy analyst at Deutsche Bank AG, said today by phone. With Woodside now considering floating LNG technology for Browse, “what’s lacking is near-term production growth,” he said.
Woodside fell 0.4 percent to close at A$36.68 in Sydney.
Woodside, which has studied expansion options in the Eastern Mediterranean region, Southeast Asia and the Americas, agreed in December to pay as much as $2.3 billion for a stake in Israel’s largest natural gas field, Leviathan. The company also reached two exploration agreements last year off Myanmar.
Woodside is waiting for Israel’s government to outline its gas-export policy, expected “in weeks, not months,” before it can complete the Leviathan transaction, Coleman said today.
Myanmar, Brazil
The Australian oil producer agreed to buy a 30 percent share in the Leviathan field for an initial $696 million from companies including Noble Energy Inc. and Delek Drilling LP.
“Moving overseas is a recognition that Australia is very, very competitive at the moment,” Coleman said. “For Woodside to be able to grow at the pace we need to we’ve got to find other opportunities. They exist elsewhere.”
Woodside isn’t currently negotiating any acquisitions, according to Coleman.
Surpassing Qatar
While Australia is forecast to surpass Qatar as the world’s largest exporter of LNG by the end of the decade with almost A$200 billion ($193 billion) of projects going ahead, it’s facing increasing competition from North America and East Africa. Further projects are now in doubt, the Australian Petroleum Production & Exploration Association has said.
The company, operator of the Pluto and North West Shelf projects in Australia, is studying bids on fields off Myanmar and was unsuccessful in bidding on blocks in Brazil, Coleman said.
Woodside is considering expansion options even after deciding last month to return about $520 million to investors in dividends. The company will also target a dividend payout ratio of 80 percent of underlying profit after tax, a level it expects to maintain for several years, Woodside said.
Browse, Sunrise
Floating LNG technology to develop Browse gives us the “very best chance of early commercialization” and will likely have a significant cost advantage, Coleman said today. Royal Dutch Shell Plc is among Woodside’s partners in that venture.
Woodside also said last month that it ended talks with companies to obtain gas supplies needed for an expansion of the Pluto development. The proposed Sunrise floating LNG venture has been stalled amid opposition from the East Timor government.
East Timor’s allegations that Australia engaged in espionage during 2004 talks on a treaty for the Sunrise natural gas field may lead to further delays, Coleman said. East Timor says the 2006 treaty to share the royalties from Woodside’s Sunrise gas resources in waters between the two countries is invalid and has started arbitration, Australian Foreign Affairs Minister Bob Carr said May 3.
“It will certainly slow things down,” Coleman said. “What I can’t tell you is to what extent.”
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