Woodside board gets ready to step on the gas
WOODSIDE is in countdown mode to give the go-ahead for its next big growth option the $10 billion development of its Pluto liquefied natural gas project on the North-West Shelf.
A final investment decision on what will be a game-changing event for the company is expected next month, possibly with the release of the group’s June half-yearprofit report.
While the market is confident Woodside will get the 100 per cent-owned project to the start line, there is uncertainty about the development cost.
Woodside has indicated it will cost $6-$10 billion, with the market expecting it to be at the upper end because of industry-wide cost pressures.
Woodside’s June-quarter report, released yesterday, said only that the board would consider a final investment decision “within the next two months”.
Capital cost increases are also on the cards for the Train 5 expansion of the existing North-West Shelf gas project, of which Woodside is manager and one-sixth partner. The cost of the project, originally approved for $2 billion in June 2005, was revised last September to $2.425 billion.
But continuing cost pressures are believed to have carried the final cost to $2.6 billion. Woodside did not refer to the issue in the quarterly report. First LNG from Train 5 is expected to be shipped in the December quarter of 2008.
Increased shipments from the four processing trains at the North-West Shelf project underpinned an increase in sales revenue for Woodside from $899 million in the preceding March quarter to $970 million in the June quarter. The revenue lift was despite the sale of the Legendre field, finalised in the March quarter, and another slump in output from the Chinguetti oilfield in Mauritania.
Woodside’s production at 17 million barrels of oil equivalent for the June quarter was down from 18.03 million barrels of oil equivalent in the March quarter. First production from the long-delayed Otway gas project, along with potential first output from Neptune and Stybarrow in the December 2007 quarter, should carry group output higher in the second (December) half.
Chinguetti, on a 100 per cent basis, was meant to produce 75,000 barrels a day. Production has fallen to as low as 12,000 barrels a day since the end of the quarter. More intense seismic coverage is expected to optimise development well opportunities.
Woodside shares closed 71 higher at $46.42.
