AUSTRALIA

Browse tensions diffused

AUSTRALASIAN Oil and Gas Exhibition and Conference organiser Bill Hare has poured cold water on h...

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Hare, who has run AOG for eight years after running a major construction conference in the 1990s, said there would be plenty of opportunity for local industry participation, especially from the subsea construction and subsequent operations and maintenance for the floating facilities.

What's more, he said the planets were aligning for the project to go ahead, and a FID decision on the mega-project - expected mid-2016 - would also give the industry the shot in the arm it needed amid a depressed oil price environment.

Western Australian Premier Colin Barnett stepped up his pressure last week when he gave the Browse joint venturers an ultimatum that renewing the leases and eventually developing the asset would depend on whether they committed to a local supply base and domestic gas supply.

While it will be unavoidable that much of the construction work will need to be done offshore - likely South Korea - other opportunities exist on Browse.

"Industry is looking to Browse to give industry the shot in the arm it needs to be the next mega-project," Hare told Energy News.

"It seems it will be floating facilities in the main, so won't be the same kind of lift for local industry participation that onshore builds of LNG plants gave certain sectors of industry [Gladstone] have been able to give.

"However, the services and supply industry is clearly more than just the construction build, and apart from the actual construction of the facility, most of other bits of that work will likely be based in Australia.

"There is a lot of the subsea work involved, the product often has to land somewhere, be serviced from somewhere and has to be installed, so that's what would come from Australia during the construction phase.

"Then there's the operations and maintenance of that, which I expect will come from Australia."

There will also be a high level of behind-the-scenes work by both government and the joint venturers to boost local participation.

Hare said there was "substantial pressure" on the likes of Browse JV operator Woodside to increase or at least prove up its Australian industry participation in such projects.

"My understanding is that is being more and more regulated without specifically being legislated by the governments," he said.

"The companies must have transparent books in terms of the contracts they let and demonstrate to government that local industry had fair access to tenders for project contracts.

"Such companies as Woodside have local content people - AIP [Australian industry participation] people working with them who must report to government on a regular basis."

On a macro level, market forces are also working in favour of Browse finally getting the go-ahead.

Development of the fields - discovered in the 1970s, have been blighted by delays and activism over James Price Point where the partners had previously considered building a LNG plant.

The Kimberley LNG plant had been the WA government's preferred option, however, it all became too expensive and the JV opted in 2013 for the as-yet unproven FLNG option.

"When a country builds four or five [LNG plants] at the one time, it's pretty clear that costs are going to go up," Hare said.

"Now that these projects are coming to the end over the next couple of years costs will come down, and when that happens it will be more attractive to build again."

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