BP agrees to buy Shell’s stake in Aussie Browse gas project

A view shows a logo of Shell petrol station in South East London, Britain, February 2, 2023. REUTERS/May James/File Photo/File Photo

SYDNEY: BP has agreed to buy rival giant Shell’s 27% stake in the Browse joint venture, expanding its holding in Australia’s largest untapped gas resource in a move that could improve the development prospects for the long-stalled project.

The Browse project, estimated to cost US$20.5bil (RM91bil), has been stuck on the drawing board for years but is now being considered as a replacement for ageing gas fields to supply the North West Shelf liquefied natural gas (LNG) plant.

Development of Browse would extend the life of the North West Shelf LNG plant for decades, helping to meet demand for LNG from Australia’s biggest trading partners, including China, Japan and South Korea, even as they turn to cleaner energy.

Shell Australia said in a statement it had agreed to sell its stake in Browse as the “asset is no longer a strategic fit in the context of Shell’s global portfolio”.

If the deal goes ahead, BP will increase its stake in Browse to 44%, overtaking operator Woodside Energy Group’s 30.3% stake. Woodside, BP and Shell are also all stakeholders in the North West Shelf LNG plant.

“BP believes development of the Browse gas resources could make a significant contribution to energy security in Australia and to the Asia-Pacific region,” a BP spokesperson said.

BP’s move comes after the major scaled back its climate targets in February with plans to produce more oil and gas for longer.

The company said it supported the concept of using carbon capture for the project and processing Browse gas in the North West Shelf LNG plant.

Both companies declined to comment on the deal price.

Credit Suisse analyst Saul Kavonic said it was likely “very modest” given “the risks and ongoing spend required at the Browse project”.

Based on the valuation that an independent expert last year put on Woodside’s stake in Browse, Shell’s 27% stake would have been valued around US$350mil (RM1.56bil) – a fraction of the US$2bil (RM8.9bil) that Mitsui and Mitsubishi paid for their 14.4% stake in 2012. — Reuters

Kavonic expected more deals involving stakes in the project, which he said still faced significant hurdles including on costs, carbon solutions and environmental approvals.

“The project is still years away from gaining real traction again, if at all,” he said.

Woodside last week played down concerns over the status of Browse project and told Reuters talks had resumed with the North West Shelf LNG joint venture about a processing deal for Browse. - Reuters

Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

BP , Shell , Browse , Australia , LNG


Next In Business News

Asia stocks mixed, investors grapple with impact of higher rates
Thai c.bank raises key rate by 25 bps to 2.50%
H&M blames warm weather for September sales slide
China decries US sanctions on Chinese firms, individuals
NETR, NIMP to hasten transition and boost investment opportunities: BNM
August 2023 export, import unit value indices up 0.5%, 1.0%
FBM KLCI remains in the red at noon
Malaysia proposes AIIB implement inclusive financing mechanism
China's central bank to use 'precise, forceful' policy to bolster recovery
Ringgit fell against US dollar in early trade

Others Also Read