Australia’s second-largest oil and gas producer, Woodside Petroleum, has shelved a $40bn floating liquefied natural gas project. The development was to be built in the Browse Basin, off the coast of Western Australia. The decision to abandon the scheme was announced in a statement to the Australian Securities Exchange, with the company citing “an extremely challenging external environment” as the reason why the joint venture participants have decided not to progress.
The project has a rocky history, with the original design for an onshore plan dropped after projected costs reached $80bn and received widespread opposition from environmental groups. The revised floating platform plan was approved by partners in 2013 and eventually won the support of the Government of Western Australia. The development was expected to deliver billions in revenue and create 1,000 jobs over the project’s lifetime.
Western Australia’s Premier, Colin Barnett, who had positioned the Browse project as a major economic boost for the state, said he was disappointed but not surprised by the decision. “I think it would have been very difficult for [Woodside] to commit probably north of $50 billion to develop this project when the price of petroleum, including natural gas, is low,” Barnett said in an interview with Macquarie Radio.
The project will likely resurface when commodity prices recover. “Woodside remains committed to the earliest commercial development of the world-class Browse resources and to LNG as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time,” Woodside’s Chief Executive, Peter Coleman, said.
Woodside Petroleum, like many others in the commodities market, has struggled amid falling prices. In February, Woodside announced its net income for 2015 was $26m, a 99 percent drop from the $2.41bn it posted a year earlier.