WA Government signs LNG domestic supply agreement with Browse Joint Venture

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Image credit: wwx.FreeDigitalPhotos.Net by Kenneth Cratty

Premier and State Development Minister Colin Barnett has announced that the WA Government has penned a Key Principles Agreement with the proponents of the Browse floating liquefied natural gas project (FLNG) for the provision of domestic gas and to locate a supply chain in WA.

Image credit: wwx.FreeDigitalPhotos.Net by Kenneth Cratty
Image credit: wwx.FreeDigitalPhotos.Net
by Kenneth Cratty

In a media statement issued on Tuesday, the Premier said this was the first time the State’s domestic policy would be applied to an FLNG project.

“While the State Government would still prefer this project to be developed onshore, this agreement ensures that the project will deliver benefits to the State in terms of domestic gas and opportunities for local businesses and workers,” Mr Barnett said, adding that the State will receive more than $1 billion in royalties over the life of the project.

“It also clears the way for the extension of the retention leases covering the project fields, and provides the Browse Joint Venture with certainty as it heads towards the front-end engineering and design phase.”

The State’s domgas policy requires exporters of LNG to make gas equivalent to 15% of their exports available in the domestic market, which also applies to the production from the State’s share (65%) of the Torosa reservoir, one of the three gas fields that make up the project, alongside Brecknock and Calliance.

“The domestic gas obligation will coincide with first production from Torosa and amount to around 800 petajoules over the life of the project, helping to secure the State’s energy future,” Mr Barnett said.

Under the agreement, the Browse Joint Venture – which consists of project operator Woodside, BP, Shell, Japan Australia LNG (MIMI) and PetroChina – has also committed to develop an integrated supply chain in WA to provide port, marine, aviation, storage and transport services over the life of the project.

“This supply chain will consist of a primary operations base in Perth, as well as support locations in the North-West,” the Premier said.

“The joint venture has committed to providing full, fair and reasonable opportunities for local industry participation, including for Aboriginal businesses and employment.”

According to him, the Key Principles Agreement will form the basis of a detailed Development Agreement, which is to be finalised prior to the joint venture making its final investment decision in 2016.