Shell, Chevron Engage in $450-M Gas Assets Swap Deal in Australia

Oil major Chevron Corp on Monday announced it had reached a $450 million agreement with Royal Dutch Shell PLC to exchange its assets in the Browse development for stakes in the Clio and Acme fields in the Carnarvon Basin.

Chevron will turnover stakes to Shell, at 16.7 per cent and 20 per cent, respectively, in its properties in the East Browse and West Browse oilfields, which upon divestment completion, effectively ups Shell's holdings in the projects to 25 per cent and 35 per cent, respectively.

Shell, on the other hand, will give to Chevron stake in two other properties, a collective 33.3 per cent in Clio and Acme, will full ownership on both, plus $450 million.

On Tuesday, Woodside Petroleum, majority investor of the proposed Browse liquefied natural gas (LNG) project, said it had agreed to Chevron's plan to divest its stake in project to Shell. It also said it is waiving its pre-emption rights in respect of the sale of Chevron Australia's entire equity stake in the Browse joint ventures to Shell Development (Australia) Pty Ltd.

"This is a good deal, not only because it aligns with Shell's strategy of bigger direct stakes in key gas resources, but because it also helps to simplify the ownership of the Browse gas fields," Andy Brown, upstream international director at Shell, said. "The Browse gas fields are a key LNG development opportunity for Australia."

Chevron vice-chairman George Kirkland likewise said the move was a strategic component to plans to extend its Wheatstone area resource base and create expansion opportunities.

The swap deal is still subject to government review.

The $30 billion-plus liquefied natural gas (LNG) project, saddled by infighting among its stakeholders, has likewise suffered major cost blowouts, not to mention opposition from environmentalists and Aboriginal landowners. It is owned by Woodside Petroleum, along with with Shell, BP, Chevron, and BHP Billiton.

Shares of Chevron Corp. jumped 10 cents to $112.73, while Class A shares of Royal Dutch Shell PLC fell 7 cents to $22.50.