SYDNEY Dec 12 BHP Billiton agreed to
sell its stake in the Browse liquefied natural gas (LNG) project
to Chinese oil and gas producer PetroChina Co Ltd
for $1.63 billion, the second partner to leave the project in
The $30 billion Browse project has been plagued by
controversy over its proposed location at James Price Point on
the northwestern coast of Australia, which has been opposed by
some project partners, environmentalists and Aboriginal
BHP's exit also comes against the backdrop of soaring costs
for the $170 billion worth of LNG export projects under
construction in Australia, thanks to labor shortages, logistics
challenges and the strength of the Australian dollar.
"This is an excellent opportunity for both companies,"
BHP's petroleum division chief Michael Yeager said in a
statement. "PetroChina has acquired an interest in a world class
gas resource and BHP Billiton has exited a non-strategic asset."
BHP said the remaining joint venture partners in the Browse
project - operator Woodside Petroleum, Royal Dutch
Shell Plc, BP, Japan's Mitsui & Co and
Mitsubishi Corp - have the right to match the offer
Barring that eventuality, BHP expects the deal to close in
the first half of next year, pending regulatory approvals.
State-controlled PetroChina, the country's
dominant oil and gas producer, has earmarked close to $16
billion for overseas investment this year as it aims to have
half its production outside China within 8 years.
The deal will require approval from Australia's Foreign
Investment Review Board, given PetroChina is state-owned.
Australia's foreign investment rules are generally seen as
more open than North America, as Australia only blocks
investments that are deemed to be against the "national
A KPMG report in August found Chinese firms invested $45.1
billion into Australia in 116 deals between September 2006 and
June this year. Ninety-two of those deals were made by 45
Chinese state-owned enterprises.
Australia has set a course of overtaking Qatar as the
world's top exporter of LNG later this decade, but cost blowouts
are threatening the viability of that aim.
BHP Billiton is selling an 8.33 percent stake in East Browse
and 20 percent of West Browse. The sale follows Chevron's exit
from the project in August when it sold its interest to Shell.
Chevron last week also revised up the costs for its Gorgon
LNG export complex by $15 billion to $52 billion.
Woodside is scheduled to make a decision on whether to go
forward with the James Price Point location by mid-2013.
The Australian Conservation Foundation (ACF) is battling
construction of a plant to process gas from the project along
the Kimberley coastline, a remote and environmentally sensitive
region in far northwestern Australia.
Environmentalists and some indigenous landowner groups want
the gas piped to other locations, which they say could include
areas around the existing North West Shelf gas hub further