Chevron to Sell Stake in Oldest Oz LNG Plant

Chevron plans to sell its minority share in the North West Shelf (NWS) LNG liquefaction plant in Western Australia, the company told various press on June 18.

"Chevron Australia has made the decision to market its non-operated one-sixth interest in the North West Shelf project, following a number of unsolicited approaches from a range of credible buyers," Chevron said, according to Reuters, without saying who the suitors were. 

The stake could fetch $3-4bn, analysts cited by Australia's Financial Review estimated.

NWS has been exporting gas for three decades from offshore fields. Its partners, which besides Chevron include Woodside Energy, Shell, BP and BHP Billiton, have invested $34bn in the plant to date. It produces just under 12mn mt/yr of LNG annually, but the Woodside fields that supply it with gas are starting to reduce their flow.

"Chevron continuing to high-grade its portfolio and putting its 16.7% stake in the NWS up for sale makes a lot of sense," Wood Mackenzie analyst David Low said. "We see the NWS facility coming off full production this year, and going forward it will need third-party gas to keep the plant full. For the NWS JV partners, this means an increasing proportion of tolling revenue will be generated, unless each party can monetise its own gas molecules through the facility. "

Chevron is unlikely to be able to monetise any of its own gas using the facility in the near term, Low said, which explains the sale. While there are a "few likely suitors," Woodside is the most likely of the current participants to acquire the US major's stake, as it is well-positioned financially and seeking acquisitions in Australia.

"We still see Australia as a strategically important part of Chevron's portfolio – it is in fact one of its most important countries in terms of remaining upstream value," Low said. "Chevron will continue to focus on squeezing maximum value from its large LNG projects, Gorgon and Wheatstone, without the distractions of the NWS."