Woodside announced to market yesterday morning that the Joint Authority for the Commonwealth-Western Australia offshore area had approved amendments to the Browse retention leases.
Details of the exact amendments were not released but they do include extending the condition for FID on the project from mid-2012 to mid-2013. The overall term of the retention leases, which cover the Torosa, Calliance and Brecknock gas fields in the Browse Basin, remains set to expire in December 2014.
Shares in Woodside opened trading at $34.81 yesterday, down around 37c from Thursday's close of $35.18. The shares dropped even further on the news to $34.27 before clawing back some losses to end the day at $34.60.
The benchmark S&P/ASX200 finished 27.7 points lower or 0.64% to 4292.1 points.
In December Woodside asked the joint authority to extend its Browse retention leases to allow more it more time to evaluate the outcomes of front-end engineering and design work.
In a statement yesterday, Woodside said the variation to the leases would also allow the company time to hear the result of the tender processes for the development's major contracts.
"The revised timetable will also allow more time to complete necessary assurance activities," it said.
Federal Resources and Energy Minister Martin Ferguson said the decision to approve variations to the Browse leases would allow the JV to address the barriers to commercialising the project while also ensuring the most efficient development of the Browse gas reserves.
"In granting the variation, [WA Mines and Petroleum Minister Norman] Moore and I recognise the complexities of the Browse LNG development and the need to ensure that the Browse joint venture has sufficient information to make a sound decision on the commercial viability of the project," he said.
Woodside wants to develop the Browse Basin gas through an LNG plant at James Price Point however its partners have been less enthusiastic and speculation has been mounting in recent times that the Browse partners were increasingly shaky about their commitment to James Price Point.
Earlier this year, a Merrill Lynch analyst told EnergyNewsPremium the decision to push back a decision on Browse could see the gas sent to the North West Shelf or to Pluto near Karratha.
Australian Greens spokesperson for the Kimberley and Northern Australia Rachel Siewert called on the JV to reassess their choice of location for the LNG hub, saying a delay to the FID was yet another opportunity for the project to be moved to a less harmful site.
"Time, resources and money have been wasted on plans to locate the LNG factory at James Price Point," she said.
"This is despite the fact that other locations exist which are already serviced by existing communities and infrastructure.
"While it is clear the WA Government favours James Price Point as a development site in order to pave the way to further industrialisation of the Kimberley, the joint venture partners must see the inherent benefits that come from piping the gas to a more appropriate processing location.
"The technical and economic viability of other locations away from James Price Point should be seriously examined by Woodside and the joint venture partners."
Meanwhile there is industry chatter a sale of a portion of Woodside's stake in the JV could come through soon with speculation Japan's Mitsui-Mitsubishi venture, which is also a partner in the NWS, to be a frontrunner, with Kogas and PetroChina making the short list, with the Chinese giant supposedly making a $2 billion offer for a 26% stake in Browse.
If the Japanese venture emerged as the buyer, then it was likely all project partners would see eye-to-eye on the processing hub for the gas, which could very well be in Karratha and not James Price Point
The Browse JV partners also include BHP Billiton, BP, Chevron and Shell.
