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Woodside buys gas field stake.

Woodside Petroleum has agreed to buy half of BHP Billiton's BHP stake in the Scarborough area gas fields off Western Australia for $400 million, in a move that could help speed a decision to develop the long delayed project.

The sale fits with BHP's effort to shift its petroleum focus to the United States and more on oil, while boosting Woodside's resources without any exploration spending at a time when weak oil and gas prices have dented earnings.

Scarborough has been stuck on the drawing board since its discovery in 1979. BHP and operator ExxonMobil Corp, whose lease was extended last year to 2020, have been looking at a $10 billion floating liquefied natural gas project.

The remote fields are seen as one of the best options for supplying gas to the North West Shelf liquefied natural gas (LNG) plant, Australia's oldest and biggest, when its existing fields start to run out of gas in the next decade.

The deal helps align the interests of the Scarborough project and North West Shelf LNG, with Woodside and BHP stakeholders in both.

'This deal is a big step to help begin to bring the JVs into alignment for a resource that has been left undeveloped for decades,' said Saul Kavonic, an analyst at consultants Wood Mackenzie.

Woodside will pay BHP $250 million up front for a 25 per cent stake in the Scarborough field and 50 per cent stakes in neighbouring fields, which Woodside will operate, plus $150 million when a final investment decision is made to develop the fields. BHP and Woodside declined to comment on whether Woodside had sought to buy BHP's entire stake.

Woodside said it supports the Scarborough partners' studies on a floating LNG project.

'If the Scarborough JV elects to look at other development options, including an onshore tieback via Woodside operated infrastructure, then Woodside would offer its support in understanding these opportunities,' Chief Executive Peter Coleman said in an emailed statement.

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Publication:Oil & Gas News
Date:Sep 11, 2016
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