Woodside Petroleum's plan to commission three massive floating LNG vessels is a step closer.
But uncertainty remains around the timing of a final investment decision on the Browse liquefied natural gas (LNG) gas project off Western Australia.
Woodside says the Browse joint venture partners have agreed to enter an engineering and design phase for the proposed development which is on track for a final decision in the second half of 2016.
However, the decision could be delayed if LNG pricing and costs are not suitable for all parties, analysts say.
Chief executive Peter Coleman said Woodside was excited to be moving into the next phase of the Browse FLNG Development using floating LNG technology.
"We will continue to work with governments, Australian industry, local communities and other relevant stakeholders to realise potential opportunities from this mega project," Mr Coleman said.
Perth-based Woodside is targeting $680 million of savings as it looks to pre-sell Browse gas despite weak prices.
"We continue to have ongoing discussions with a range of regional LNG customers regarding potential LNG sales," the company said.
Browse LNG volumes would be marketed on an equity basis from Woodside's LNG portfolio.
Mr Coleman said the Browse FLNG development concept was based on three offshore floating LNG facilities utilising joint venture partner Shell's floating technology.
The project will exploit the Brecknock, Calliance and Torosa gas fields off Western Australia which contain 15.4 trillion cubic feet of dry gas and 453 million barrels of condensate.
The Browse joint venture partners have also entered into an equity arrangement which, subject to approval, will give Woodside a 30.6 share of dry gas and condensate.
Joint venture partners Shell, BP, PetroChina and a venture between Mitsui and Mitsubishi will hold the remaining share.
Woodside scrapped its controversial proposal for an onshore gas plant near Broome in 2013, saying it would have cost more than $80 billion.
Fat Prophets resources analyst David Lennox said the long awaited Browse project would play a large role in Woodside's future, but the company would carefully examine costs and gas prices at the time of making a final investment decision.
"They'll push it right to the point where if it's not economic they'll walk away from it and wait for better pricing," Mr Lennox said.
He said the engineering and design process was expensive and Woodside would ultimately go ahead with the project.
West Australian Premier Colin Barnett said Woodside's decision would lift confidence in the West Australian resources sector and the state as a whole.
Woodside shares were 19 cents, or 0.6 per cent, higher at $34.42 at 1420 AEST.
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