In a statement to the market, Woodside advised that following completion of front-end engineering and design (FEED) work, the Browse Joint Venture participants decided not to progress with the development at this time considering the current economic and market environment.
Since FEED entry, Woodside has been focused on delivering targeted cost savings and value enhancements. While significant progress was made to improve project value, Woodside advised that this had been offset by an extremely challenging external environment.
Woodside CEO Peter Coleman acknowledged the high quality of technical and non-technical work completed on the Browse FEED program to enable the Browse Joint Venture participants to reach this decision.
“We have undertaken a comprehensive and rigorous process to assess all elements of the development.
“The decision represents a disciplined approach to large-scale capital investment and is consistent with our requirements for a development concept to be commercially robust across a range of scenarios.
“Woodside remains committed to the earliest commercial development of the world-class Browse resources and to FLNG as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time.
“Accordingly, we will use the additional time to pursue further capital efficiencies for Browse,”? he said.
Woodside will now work with the Browse Joint Venture participants to prepare a new work program and budget to progress development activities.
Woodside intends to leverage the high quality work delivered to date, which includes the involvement of the State Government to agree key principles for domestic gas and supply chain arrangements and the State and Commonwealth Governments to manage maritime boundary changes.
Woodside said that it remained focused on satisfying its work program commitments under the Browse retention leases.
The Browse retention leases were renewed in 2015 and the current term of the leases ends in mid-2020. Woodside’s participating interest in the Browse resources is 30.6 per cent (net Woodside 2C share of 4.9 trillion cubic feet of dry gas and 142.6 million barrels of condensate) as reported in the Woodside 2015 Annual Report.