Woodside warns of competition as it mulls $40bn projects
Woodside says it must ensure investment decisions on its Scarborough and Browse gas projects stack up against rivals.
Woodside Petroleum said it faced stiff competition from international LNG projects and needed to ensure a pending $40bn pipeline of investment decisions on its Scarborough and Browse gas export projects in Western Australia stack up against their rivals.
The Perth-based producer expects to make final investment decision calls on the two giant gas projects in the next 18 months as it seeks to execute an ambitious concept of piping the gas back to an expanded Pluto LNG plant in the case of Scarborough and to help fill the North West Shelf plant from Browse.
“These are decisions we don’t take lightly ... decisions that are framed by both current and future policies and market conditions. These are decisions occurring in the context of stiff global competition as other producers race to progress their projects,” Woodside chief executive Peter Coleman told an AmCham lunch in Sydney on Thursday. “We are competing with other producers globally. And Australia is competing globally for capital; competing with countries like the US that offer favourable tax rates; Competing with countries where labour costs are lower and regulation less onerous.”
One of Woodside’s biggest challenges is sealing a deal with a slew of big name oil majors who own stakes in the NW Shelf and Browse projects. Woodside remains locked in discussions with the two joint ventures with Woodside, BP, Shell and Japan Australia LNG all holding stakes in both NW Shelf and Browse while Chevron and BHP only have ownership in the NW Shelf.
Mr Coleman said federal government efforts to streamline projects approval in conjunction with the WA government were useful and could help to speed up the process for major projects.
“We applaud the initiative taken by both governments to co-ordinate their approach on this. And we urge them to continue to pursue further changes to reduce excessive regulation that can jeopardise investment, without of course compromising standards,” Mr Coleman said.
He also called for certainty on industrial relations as it looks ahead to large construction and engineering challenges should the two projects proceed.