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Asia: Japan's Mitsubishi, Mitsui confirm interest in Browse LNG

https://www.chemnet.com   Mar 11,2011 Platts
Japanese trading houses Mitsubishi and Mitsui both confirmed their interest Thursday in Woodside Petroleum's proposed Browse LNG project in Western Australia.

"We are interested in the project but have not decided yet whether to go ahead," Shunsuke Nanami, spokesman for Mitsubishi said. He added that he could not comment on any specifics of their possible involvement with the project, or on any timeline for a decision.

Similarly, Kazuhisa Kawamura, spokesman for Mitsui, said: "We are interested in new projects, including Browse LNG, but we have not made any decisions yet." He too added that he could not comment on the specifics of any proposed deal.

Earlier, Woodside Petroleum declined to comment on a press report suggesting it had approached Mitsubishi and Mitsui to take equity stakes in the proposed Browse LNG project in Western Australia.

"There is significant interest in Browse LNG from a wide range of LNG buyers," a Woodside spokeswoman said. The company was holding talks with buyers, but "we do not comment on our commercial discussions with individual customers," she added.

Daily business newspaper The Australian Financial Review earlier quoted Western Australian Premier Colin Barnett, who began an eight-day tour of Japan and South Korea on March 5, as saying: "Mitsui and Mitsubishi are looking at further investment in natural gas projects and that might include the Browse. That could be via buying out the stake of one of the current partners, or one of those partners diluting their ownership -- there was some discussion about that."

The Browse LNG project in Western Australia's Kimberley region is operated and owned about 50% by Woodside. The company's partners in the development are BP, BHP Billiton, Chevron and Shell.

The project entered the front-end engineering and design phase of work last month and the joint venture had committed to spending A$1.25 billion ($1.26 billion) developing the proposal to enable a final investment decision in mid-2012, aiming for a 2017 startup. The LNG plant is to be built at the so-called Kimberley LNG precinct on James Price Point, which is being promoted by the Western Australian government as a central processing point for gas developed in the offshore Browse Basin.

The foundation project would comprise a three-train plant producing 12 million mt/year of LNG, based on the the Torosa, Brecknock and Calliance fields with a combined contingent resource of about 13.3 Tcf of dry gas and 360 million barrels of condensate. The precinct site is designed to eventually host facilities for at least two proponents, producing up to 50 million mt/year of LNG.

Mitsui and Mitsubishi are already stakeholders in Australia's LNG industry, through their Japan Australia LNG joint venture, which owns one sixth of the 16.3 million mt/year North West Shelf project. According to the Australian Financial Review, Mitsubishi is also poised to take an interest in the Santos-led Gladstone LNG project in the eastern state of Queensland, through the acquisition of some of Korea Gas Corporation's 15% equity in the coalseam gas-based development.

Kogas said in February it was considering selling a 10% stake from its equity in the GLNG project to a South Korean or Japanese buyer. Kogas has an offtake agreement for 3.5 million mt/year of GLNG's output for 20 years from 2015.

Santos sanctioned the development of the $16 billion GLNG project, located on Curtis Island in Gladstone, on January 13. The project is currently owned by Santos (30%), Petronas (27.5%), Total (27.5%) and Kogas (15%).

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