The Gorgon Project partners have radically altered their equity structure after ChevronTexaco, ExxonMobil and Shell Australia unitised their interests in a framework agreement for the Greater Gorgon area. This is aimed at boosting the project's critical mass and enabling a second LNG train instead of the originally planned single train project.
ChevronTexaco now has 50% (formerly 4/7 share), with ExxonMobil (previously 2/7 share) and Shell Australia (previously 1/7 share) now having 25% each. BP, which has a minority interest in the Io field, has not joined the agreement which covered 11 gas fields in the Greater Gorgon area, but spokesmen indicated it was having discussions with the Gorgon partners.
Meanwhile, the news that the Gorgon partners they are planning to construct two LNG trains instead of the initial one will mean they must build a new gas trunkline linking West Australian gas markets with the planned Barrow Island processing hub.
Gorgon operator, ChevronTexaco, also said this week it remained confident it would secure its Chinese sales contracts, despite reports from China that talks were stalling.
And Gorgon partner, Royal Dutch/Shell is now saying it will book Greater Gorgon reserves when all Securities and Exchange Commission requirements are met. With the final investment decision for Gorgon planned for mid 2006, that may not be too far away.
Gorgon was one of the assets at the centre of the Royal Dutch-Shell reserves booking scandal in which Shell’s oil and gas reserves as of 2002 were overstated by 41%. Shell currently has no proved reserves in the Greater Gorgon area.
Shell may also be considering making another takeover bid for Woodside Petroleum that might this time be allowed by the Australian government, according to bank and broker UBS.
Woodside and Shell have both refused to comment on this speculation, but Shell did confirm that its executive had met with government officials recently before making an announcement on the Gorgon gas project.
Shell already owns 34% of Woodside and is a partner in the North West Shelf project. In 2001 Shell tried to take over the Perth-headquartered company. But Treasurer Peter Costello blocked the $10bn bid because of concerns Shell would favor its own projects over the North West Shelf venture.
But in a new report, UBS said "circumstances are arguably different now" because the North West Shelf project was now maturing and other Australian LNG operations were being built or planned.
"If Shell were to revisit its desire to gain control of Woodside, we believe it would be incorrect to assume an automatic rejection from the Foreign Investment Review Board," the UBS report said. "It could possibly structure a new offer that is tailored to be more attractive to all parties involved."
Meanwhile, Woodside has not been idle. Recently completed wireline logging of the Pluto-1 exploration well located in the outer Carnarvon Basin indicated a gross gas column of about 225 metres and the well is now being prepared for production testing.
Pluto is 15km from ChevronTexaco's similar-sized Wheatstone discovery and 110km south-west of the North Rankin production platform. Both companies are partners in the North West Shelf venture and their combined discoveries could provide enough gas to feed a four to five million tonnes per year LNG train over 20 years.
