Regional LNG: Woodside needs customers for LNG expansion: Report

Woodside Petroleum Ltd., Australia's second-largest oil and gas company, has yet to sign customers for 30 percent of the liquefied natural gas it will produce from a planned fifth production line at its North West Shelf venture, Bloomberg quoted Goldman Sachs JBWere Pty as saying on Thursday.

Woodside wants to go-ahead without signing long-term sales contracts, Chief Executive Don Voelte said on Feb. 17, after the company missed out on a 20-year contract to sell LNG to Korea Gas Corp. The Northwest Shelf plans to complete the expansion in late 2008, ahead of the start of ChevronTexaco Corp.'s Gorgon LNG project in Australia the following year.

?We believe it is likely the partners will proceed with the investment decision,? said Goldman Sachs JBWere analyst Anthony Bishop in a March 15 report.

The $10 billion North West Shelf venture, which includes BP Plc and BHP Billiton, last year expanded capacity by 56 percent to meet a A$25 billion contract to supply the fuel to China. The partners would need to approve the expansion within the next three months, Bishop said. BHP Billiton, the world's largest miner, prefers contracts underpin the expansion, Bishop said.

The venture will also likely exceed the A$2 billion ($1.6 billion) projected cost for the line in Western Australia due to rising steel costs, Bishop said in the report. Steel prices have gained 190 percent in U.S. dollars terms since January 2002, he said.

Woodside owns one-sixth of the venture and is the operator. ChevronTexaco, BHP Billiton, Shell, and a joint venture between Mitsubishi Corp. and Mitsui & Co. also own stakes in the North West Shelf, Australia's only producing LNG project. (*)