Woodside and Chevron swap oil & gas and CCS assets offshore Australia

Australian energy giant Woodside and Chevron Australia, a subsidiary of the U.S.-headquartered energy player Chevron, have set an asset swap deal in motion to consolidate their interests in core areas of operations and focus on strategic oil, gas, liquified natural gas (LNG), and carbon capture and storage (CCS) assets each of them operates in Western Australia.

Thanks to the proposed asset swap, Chevron will transfer to Woodside its 16.67% non-operated interest in the North West Shelf (NWS) project, NWS oil project, and its 20% non-operated interest in the Angel CCS project. As a result, the company will acquire Woodside’s 13% non-operated interest in the Wheatstone project and 65% operated interest in the Julimar-Brunello project.

Furthermore, Chevron Australia will pay Woodside around $400 million after key milestones are met. This payment depends on the Australian firm’s execution and handover of the Julimar Phase 3 project to the U.S. oil major. The transaction is subject to several conditions precedent, including regulatory approvals.

Mark Hatfield, Managing Director of Chevron Australia, commented: “This transaction will enable us to consolidate our focus and resources on key assets we operate in Western Australia, in this case our Wheatstone project. The North West Shelf project paved the way for Western Australia and the nation to become international leaders in natural gas and has been operated by Woodside to a world-class standard.

“We have been an active participant in the North West Shelf Project since its foundation over 40 years ago and we are proud of the project’s record as a safe, competitive, and reliable supplier of domestic gas and LNG and its transformation into a tolling facility.”

Wheatstone is operated by Chevron Australia and is a joint venture between the Australian subsidiaries of Chevron (64.14%), Kuwait Foreign Petroleum Exploration Company (KUFPEC) (13.4%), Woodside Energy (13%), and Kyushu Electric Power Company (1.46%), together with PE Wheatstone, part-owned by JERA (8%).

According to Woodside, the deal with Chevron will enable it to streamline its Australian portfolio and consolidate its focus on operated LNG assets; simplify NWS joint venture ownership, unlocking economic recovery of existing production and future development opportunities; and strengthen near-term cash flow to support shareholder distributions and ongoing investments.

Meg O’Neill, Woodside’s CEO, commented: “The strategic and commercial rationale for this asset swap is compelling for Woodside. This transaction simplifies our portfolio, improving our focus and efficiency by consolidating our position in our operated LNG assets. It is immediately cash flow accretive and includes a cash payment upon both execution and completion. This year, the North West Shelf project and its Karratha gas plant celebrated 40 years of operations.

“The Western Australian government’s recent decision to extend the environmental approval for the North West Shelf project supports its ongoing contribution to reliable energy supply for local and global customers. This transaction creates greater opportunity to fill emerging processing capacity and maximise value accretive recovery from the North West Shelf project. It also provides greater alignment and improves the commercial prospects for the proposed Browse to North West Shelf project.”

The approval of the NWS extension is perceived to be the key to advancing the firm’s $30 billion Browse gas project. If the federal approval comes in, this will extend the Karratha gas plant’s life to 2070. The asset swap deal is subject to the completion of the Julimar Phase 3 project execution and handover, which is expected in 2026, and the completion of certain ongoing abandonment activities.

This is a four-well tie-back to the existing Julimar field production system and is currently in the execution phase, which Woodside will continue to operate, transferring the asset to Chevron at the project start-up. The transaction is expected to close in 2026.

“This improves joint venture planning for decarbonisation opportunities at Karratha Gas Plant. Our increased equity in the Angel CCS Project also supports future development of this large-scale, multi-user carbon capture and storage hub in Western Australia,” highlighted O’Neill.

The NWS project consists of several active joint ventures. Currently, Woodside has a participating interest of 33.33% and Chevron has a 16.67% participating interest in all of these joint ventures, apart from the NWS joint ventures with CNOOC.

Therefore, Woodside’s participating interest is 25% and Chevron’s is 12.5% in the CLNG JV with CNOOC. On the other hand, Woodside’s participating interest is 31.567% and Chevron’s participating interest is 15.78% in the extended interest JVs with CNOOC.

The NWS oil project consists of the Cossack, Wanaea, Lambert, and Hermes (CWLH) oil fields development located within four production licenses (WA-3-L, WA-11-L, WA-13-L, and WA-16-L) in the North Carnarvon basin offshore Australia.

The project comprises 13 subsea wells, with production achieved through the FPSO Ohka, which was installed in 2011 and has 60,000 bbls/d of oil processing capacity, along with water handling and gas processing/reinjection facilities.

Jadestone acquired MIMI’s 16.67% working interest in the CWLH oil fields, subsea infrastructure, the FPSO Okha, and full abandonment liabilities, a year after the company bought BP’s stake in the project.