Chevron may sell North West Shelf stake to PetroChina
Chevron may sell its stake in the North West Shelf LNG plant following its $US50 billion ($70bn) takeover of Anadarko Petroleum.
Chevron may sell its stake in the Woodside-operated North West Shelf LNG plant following its $US50 billion ($70bn) takeover of Anadarko Petroleum, with the state-owned PetroChina a potential buyer, Credit Suisse says.
The US energy giant has signalled that as part of its blockbuster deal it will boost asset sales to $US15bn-$20bn over the next three years, from $US5bn-$US10bn previously indicated, to offset the cost of the Anadarko buyout. That could bring into play Chevron’s 16 per cent stake in the NW Shelf, Australia’s oldest LNG project, with an expected rejig among its six joint venture partners looming as the facility moves to a new tolling model where it will process gas from third parties for the first time.
“The North West Shelf project presents an asset soon to enter decline from circa 2021, entailing material joint venture alignment challenges to extend its life,” Credit Suisse analyst Saul Kavonic said. “Chevron in particular sits as an unaligned joint venture partner in our view, given Chevron is not in the Browse ‘backfill’ project.”
Four of the NW Shelf partners — Woodside, Shell, BP and Japan Australia LNG — also hold stakes in the long-delayed Browse project offshore Western Australia, with gas from that field in line to be processed through the Karratha gas plant.
PetroChina could emerge as a buyer of Chevron’s NW Shelf stake given its 10 per cent Browse holding, according to Credit Suisse, along with Woodside itself should it want to gain greater control over the gas hub during its next phase of operations.
“We would consider leading candidates to buy Chevron’s stake in NW Shelf — should it be considered for sale — to be PetroChina, which is in Browse but not NW Shelf, or Woodside to double down on assets it knows best and help streamline joint venture alignment on a core Woodside growth project,” Mr Kavonic said.
Chevron had historically been seen as a potential hurdle in moving the NW Shelf towards a toll-treating future, given it operates two rival LNG plants in the same region: Gorgon and Wheatstone.
However, a preliminary NW Shelf deal signed in November for Browse also included a pact to process gas from Chevron’s wholly owned Clio-Acme field.
But consultancy WoodMackenzie countered that the opportunity to build on its dual role as both a NW Shelf partner and third-party gas supplier means Chevron is unlikely to sell out of the historic facility. “There is a need for third-party gas to backfill the facility as there is a lack of indigenous gas supply within the NW Shelf joint venture portfolio,” WoodMackenzie senior upstream analyst David Low said.
“This presents a large opportunity for Chevron for two main reasons: it already has a seat at the negotiating table of one of the most commercially complicated joint ventures in the world, and Chevron is one of the only operators in the basin with a huge amount of gas reserves that can be accelerated and monetised.”
Chevron may sell some of its Asian assets but Australia will become “a greater focal point” for it in the coming years for this reason, according to WoodMackenzie.
Still, Credit Suisse reasons the major will at least consider cashing out its NW Shelf stake and instead focusing on maximising value from its Gorgon and Wheatstone plants, and pursuing Anadarko’s Mozambique LNG project where a final investment decision is due in the next few months.
Chevron was unavailable for comment.