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The Wall Street Journal: Woodside Signs LNG Export Deal With PetroChina

By ALEX WILSON and LYNDAL MCFARLAND
September 7, 2007

MELBOURNE, Australia — Woodside Petroleum Ltd. took a big step forward on its Browse liquefied-natural-gas project Thursday, signing up PetroChina Co. as its foundation customer.

Woodside signed a terms agreement with the state-controlled Chinese company for the potential sale of between two million and three million metric tons of LNG a year over 15 to 20 years from Browse, which is based off the coast of the state of Western Australia.

As well as adding a level of certainty to the project, the deal is also a sign that the Chinese have shaken off their reluctance to pay market prices to secure access to LNG.

The parties will negotiate a firm LNG-supply agreement based on this preliminary agreement with gas supply due to start between 2013 and 2015.

Woodside’s chief financial officer, Mark Chatterji, said the deal is the biggest single export deal signed by an Australian company and has the potential to bring revenue of between 35 billion Australian dollars and A$45 billion (US$29 billion to US$37 billion) into the country.

The agreement is conditional on government approvals and a final investment decision on development of the Browse field, which is estimated to contain 20 trillion cubic feet of gas.

The Browse field lies off the Kimberley coast in Australia’s remote northwest and Woodside is operator with a stake of about 46%, alongside project partners BHP Billiton Ltd., Royal Dutch Shell PLC and Chevron Corp.

Morgan Stanley analyst Stuart Baker said the PetroChina deal gives the Browse project increased certainty.

“Clearly getting a customer and, presumably at prices that are world reflective, is the first base in all of this,” he said.

The signing of the Browse deal follows the announcement Tuesday that PetroChina will also buy Australian gas from the giant Gorgon project from Shell.

Write to Alex Wilson at [email protected] and Lyndal McFarland at [email protected]

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