Critical Decision In Days For $17.5 Billion Australian Gas Project

Australia’s role as a major supplier of liquefied natural gas (LNG) to countries in Asia is at risk as a newly appointed government minister considers whether to grant final approval for the construction of a long-delayed project.

The proposed $17.5 billion Browse development could supply 11.4 million tons a year of LNG to customers in Japan and China but has been bogged down for more than a decade by changes to its design and objections from environmental activists.

Murray Watt, who was appointed Australia’s Environment Minister earlier this month says he will make a decision on Browse by the end of next week.

Pressure on the Australian Government to make a decision on Browse intensified earlier this year when a senior Japanese energy official warned that his country would look elsewhere for LNG unless Australia changed its slow-motion decision-making process.

Hitoshi Nishizawa, senior vice-president with JERA, a Japanese energy buying business owned by power utilities, said his organisation would look elsewhere for gas supplies if Australian project development decisions continued to be delayed.

“While Australian LNG is expected to continue to make up part of Japan’s long-term energy mix, in the future it may not be the first choice as it has been in the past,” Nishizawa said.

That warning will be a factor in Watt’s decision on Browse, along with protests from environmentalists opposed to the development which is centred on a series of gasfields 265 miles off the coast of Western Australia.

The Clock Is Ticking

“The clock is ticking,” Nishizawa said. “Inaction could potentially cost Australia thousands of jobs, billions of dollars in lost revenue and weaken regional trade partnerships.”

Based on three gas deposits discovered more than 40 years ago, Browse was originally planned as a project piping gas to the nearest landfall at James Price Point near Broome on WA’s Kimberley coast.

When that site was ruled out a plan emerged to send the gas 560 miles south by submarine pipeline to be processed at the existing North West Shelf LNG facility near Karratha operated by Woodside Energy.

Woodside is operator of the Browse project, holding a 30.6% stake. British oil and gas company, BP has a 44.33% interest. PetroChina has a 10.67% share and Japan Australia LNG (owned by Mitsui and Mitsubishi) owns 14.4%.

The development plan for Browse starts with two floating production storage and offloading (FPSO) vessels connected to a pipeline which runs to the existing North Rankin gas platform off the coast near Karratha from which Browse gas will be sent to the North West Shelf LNG plant for export and into an existing domestic gas pipeline system.

Design work on the Browse project is being finalised, leading to a final development decision after receipt of all government approvals.