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BHP To Sell Browse LNG Project Stake To PetroChina For $1.63 Bln

12/11/2012 10:12 PM ET

Mining giant BHP Billiton Ltd. (BHP: Quote,BHP.AX, BBL, BLT.L) agreed Tuesday to sell its stake in the proposed Browse liquefied natural gas (LNG) project in Australia to Chinese oil and gas company PetroChina Co. (PTR: Quote) for $1.63 billion in cash.

The deal, subject to regulatory approval, is expected to close in the first half of 2013. BHP said the deal will require approval from Australia's Foreign Investment Review Board as PetroChina is state-owned.

"This is an excellent opportunity for both companies. PetroChina has acquired an interest in a world class gas resource and BHP Billiton has exited a non-strategic asset," BHP Chief Executive Petroleum Michael Yeager said in a statement.

The deal will see PetroChina buying BHP's 8.33 percent stake in the East Browse and its 20 percent stake in the West Browse, located in offshore Western Australia state.

Australia's Woodside Petroleum Ltd. (WPL.AX, WOPEY, WOPEF) is the major equity holder and operator of the proposed Browse LNG project in the Kimberley region of Western Australia. The other project partners include the Australian units British energy giants Royal Dutch Shell Plc (RDS-A,RDSA.L,RDSB.L,RDS-B), and BP plc (BP, BP.L) as well as Japanese trading companies Mitsubishi Corp. (MSBHY.PK, MSBHF.PK) and Mitsui & Co. Ltd. (MITSY.PK).

The move by BHP makes it the second partner to leave the project in recent months. Chevron Corp. (CVX: Quote) exited the project in August by selling its 16.7 percent interest in the East Browse and 20 percent interest in the West Browse to Royal Dutch Shell.

Meanwhile, BHP said the remaining project partners in the Browse project hold the first right to match the offer from PetroChina, and have a customary period to consider whether to make a matching offer. That offer will also needs regulatory approval.

PetroChina is said to have earmarked nearly $16 billion for overseas investment this year as it aims to have half its production outside China within eight years.

The Browse LNG project partners are said to be leaving the troubled project amid Woodside's plan to develop the project at the controversial James Price Point site on the Kimberley coast. The partners argue that site development itself will involve huge initial costs and is also strongly opposed by some environmental and indigenous groups, which want the gas piped to Karratha.

Meanwhile, Woodside is reportedly scheduled to make a decision on whether to go forward with the James Price Point location by mid-2013.

The $30 billion project aims to commercialize natural gas and condensate from the Browse's three gas and condensate fields, Brecknock, Calliance and Torosa, 425 km north of Broome off the Kimberley coast. The project partners aim to make the final investment decision by June 2013.

BHP closed Tuesday's regular trading session at $75.14, up $1.31 or 1.77% on a volume of 3.06 million shares. In the past 52-week period, the stock has been trading in a range of $59.87 to $82.23.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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