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PetroChina buys 10% share of Aussie gas project

PETROCHINA Co agreed to buy a minority stake in a proposed liquefied natural gas project in Australia for US$1.63 billion from BHP Billiton as the Chinese company aims to boost overseas output.
PetroChina will acquire an 8.33 percent stake in the East Browse joint venture and 20 percent in the West Browse venture, BHP said in a statement today. The deal will give PetroChina a 10 percent stake in the Browse LNG project, according to Neil Beveridge, analyst at Sanford C. Bernstein.
"This is an excellent opportunity for both companies. PetroChina has acquired an interest in a world-class gas reserve and BHP Billiton has exited a non-strategic asset," said J. Michael Yeager, the petroleum chief executive of BHP, the world's largest mining company.
The Browse project, offshore Western Australia, is the largest stranded gas reserve in Australia and has been waiting for two decades since discovery. Other owners of the project include Woodside Petroleum Ltd, the largest equity holder and operator, and BP Plc, Royal Dutch Shell and a Japanese venture between Mitsubishi Corp and Mitsui & Co.
Beveridge said PetroChina's entry is a "clear positive" for other partners as development is now likely, though the deal seems expensive for PetroChina compared with what the Japanese companies paid earlier this year.
"The decision by PetroChina to pay a high price for entrance to a stranded high-cost LNG development indicates a lack of confidence in alternative supplies being available," he said, referring to its planned Arrow LNG project with Shell in Queensland, US LNG exports, Russia pipeline gas as well as domestic shale gas.
PetroChina said earlier that it aims to raise its overseas oil and gas production to half of its total output by the end of this decade.

 

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