PERTH (miningweekly.com) – Oil and gas major Woodside on Friday said the company would "consider" making an offer for US energy giant Chevron’s 16.67% stake in the North West Shelf asset, offshore Western Australia.
Reports emerged this week that Chevron was seeking to sell out of the North West Shelf asset, Australia’s largest and longest running liquefied natural gas (LNG) venture, "following a number of unsolicited approaches from a range of credible buyers".
Chevron’s stake in the North West Shelf asset is estimated to be worth $3-billion to $4-billion.
A spokesperson for Woodside, which acts as operator of the North West Shelf, told Mining Weekly Online that as one of six founding partners, Chevron had been a part of building the project into what it is today; one of Australia’s most important infrastructure assets.
“The North West Shelf Project is a significant supplier of gas to the Western Australian and international markets and we look forward to unlocking its future value alongside our joint venture (JV) partners,” the spokesperson said.
“The North West Shelf JV agreement has pre-emption provisions relating to divestment of an interest in the North West Shelf. If a North West Shelf venturer was to propose a transaction coming within the pre-emption provisions, Woodside would consider the transaction in the normal course,” she added.
Analyst Wood Mackenzie (Woodmac) said that Chevron placing its 16.67% stake up for auction made a lot of sense.
“We see the North West Shelf facility coming off full production this year, and going forward it will need third-party gas to keep the plant full. For the North West Shelf JV partners, this means an increasing proportion of tolling revenue will be generated, unless each party can monetise its own gas molecules through the facility,” Woodmac senior analyst David Low said.
"Chevron unsuccessfully tried to monetise the Clio/Acme asset via the North West Shelf last year, and is unlikely to be able to monetise any of its gas through the facility in the near-term. We see this as part of the reason why its stake in the North West Shelf is up for sale.
"In terms of buyers, there are a few likely suitors, but of the existing participants we see Woodside as the most likely buyer. It is well-positioned financially and has announced it is ready and looking for merger and acquisition opportunities in Australia.
"We still see Australia as a strategically important part of Chevron's portfolio, it is in fact one of its most important countries in terms of remaining upstream value. Chevron will continue to focus on squeezing maximum value from its large LNG projects, Gorgon and Wheatstone, without the distractions of the North West Shelf."