Chevron has plans to sell its 16.67 per cent stake in the Woodside-operated Australian North West Shelf (NWS) project, in line with its previously announced plan to sell natural gas assets around the world to cut costs and recalibrate its long-term energy investments.
Along with Chevron and Woodside, miner BHP, bp’s local unit BP Developments Australia, Japan-Australia LNG (a joint venture between Mitsubishi and Mitsui) and Shell all have equal one-sixth interest in the project each.
The decision comes at a time when the NWS joint venture is transitioning the project into an open-access tolling facility, which would allow it to monetise the remaining reserves in offshore Western Australia.
Wood Mackenzie’s senior analyst David Low said Chevron continuing to high-grade its portfolio and putting its stake in the NWS up for sale makes a lot of sense.
“We see the NWS facility coming off full production this year, and going forward it will need third-party gas to keep the plant full. For the NWS JV partners, this means an increasing proportion of tolling revenue will be generated, unless each party can monetise its own gas molecules through the facility.”
Mr Low said Chevron unsuccessfully tried to monetise the Clio/Acme asset via the NWS last year, and is unlikely to be able to monetise any of its gas through the facility in the near-term.
“We see this as part of the reason why its stake in the NWS is up for sale,” he said.
“In terms of buyers, there are a few likely suitors, but of the existing participants we see Woodside as the most likely buyer. It is well-positioned financially and has announced it is ready and looking for M&A opportunities in Australia.
“We still see Australia as a strategically important part of Chevron’s portfolio – it is in fact one of its most important countries in terms of remaining upstream value. Chevron will continue to focus on squeezing maximum value from its large LNG projects, Gorgon and Wheatstone, without the distractions of the NWS.”
