Shell weighs exit from Australia’s North West Shelf as global strategy shifts

The North West Shelf’s Karratha Gas Plant in Western Australia.

Shell is evaluating a sale of its stake in Australia’s North West Shelf venture, potentially giving Woodside room to further consolidate control of the country’s longest-running liquefied natural gas export project.

The UK-headquartered major is exploring divestment of its 16.67 per cent shareholding in the Karratha-based LNG plant, the largest such facility in Australia, according to people close to the project.

Any deal would follow Shell’s decision last year to quit the proposed Browse LNG development, once considered the most likely long-term backfill option for the North West Shelf.

With the venture’s original offshore gas fields declining, new supply sources are critical to keeping its five LNG processing trains running beyond the late 2020s. Browse remains central to those plans, but Shell’s withdrawal from the $US30bn ($46bn) project has weakened the rationale for maintaining its North West Shelf position, the sources said.

“Shell regularly assesses its portfolio to inform disciplined capital allocation,” a company spokeswoman said. “We continue to work closely with the North West Shelf partners to deliver value, maximise future performance and meet the needs of our customers.”

The North West Shelf, operational since 1989, has underpinned Australia’s rise as the world’s second-largest LNG exporter, delivering cargoes to Japan, China and South Korea for more than three decades. Its ownership has been steadily reshaped in recent years as global majors reassess their portfolios.

The North Rankin Complex in the North West Shelf project, Western Australia.

Woodside Energy last year cemented its dominance by buying Chevron’s one-sixth interest for about $US2bn, lifting its stake to 50 per cent and giving it effective control over the venture’s future. The other partners are BP, Japan Australia LNG – a Mitsubishi and Mitsui joint venture – and Shell.

A Shell exit would represent the latest stage in that reshuffle, potentially giving Woodside an opportunity to consolidate further or inviting new capital into a project that remains critical for Western Australia’s economy and gas market.

Canberra will also be watching closely. The Albanese government and Woodside are locked in talks about approvals to extend the facility’s operating life into the 2050s. Proponents see the project’s longevity as essential not only for sustaining export revenue but also for maintaining a reliable domestic gas system in WA, which has long been insulated from the supply crunch threatening the east coast.

For Shell, a divestment would align with a broader strategy of pruning assets that no longer fit with its growth agenda. The company remains a major player in Queensland through its majority stake in the Queensland Curtis LNG project, which exports coal seam gas from the Surat Basin.

Globally, Shell has been streamlining its portfolio under chief executive Wael Sawan, who has pivoted away from some of the green energy commitments made under his predecessor, Ben van Beurden. Mr Sawan has warned of a “ruthless” focus on performance, trimming businesses that struggle to generate adequate returns.

The latest casualty is a planned biofuels complex in Rotterdam that had been pitched as one of Europe’s largest producers of sustainable aviation fuel and renewable diesel.

Shell this week confirmed it will not restart construction of the plant.

Construction began in 2022 but was suspended last year amid weak market conditions, prompting an impairment charge of about $US780m ($1.2bn). The company has now decided to scrap the project altogether.

The decision marks a sharp reversal from the ambitions set out during Mr van Beurden’s tenure, when Shell pledged to hit net zero emissions by 2050 and committed to a pipeline of renewable and low-carbon projects. At the time, the Rotterdam plant was expected to rely on used cooking oil, animal fats and other waste products, supplemented by sustainable vegetable oils, to produce fuel for aviation and road transport.

Shell had also flagged plans to capture and store carbon dioxide from the manufacturing process in a depleted North Sea gas field.

But Mr Sawan has already pared back Shell’s exposure to low-returning ventures. He has sold its loss-making UK household energy retail business, stepped back from large-scale wind projects, and questioned the economics of sustainable aviation fuel.

Shell insists it remains committed to low-carbon fuels where commercial returns are clearer. It says it traded more than 10 billion litres of low-carbon fuels last year.

For Australia, Shell’s potential North West Shelf exit will be closely watched by governments and industry alike. The project remains a linchpin of the nation’s LNG export machine, and its future ownership will help shape the trajectory of export revenues and domestic energy security.