Osaka Gas buys stake in Australia’s Browse

Japanese energy firm Osaka Gas (TSE: 9532) has purchased a 5% interest in the Browse gas project from the UK’s BP (NYSE: BP), Reuters reported on September 18.

The acquisition of the share will be completed through Osaka Gas Browse, which will be jointly owned by Osaka Gas Australia and state-run backed Japan ​Organization for Metals and Energy Security (JOGMEC). The acquisition is pending approval by regulatory bodies and joint venture partners. The deal allows Osaka Gas to further diversify its portfolio of LNG supply.

The proposed project in the Browse Basin offshore Western Australia would see the development of the Brecknock, Calliance, and Torosa ‌gas ⁠fields. The project is currently in the pre-front-end engineering (Pre-FEED) stage.

Australia’s Woodside (NYSE: WDS) is the operator of the project with a 41% stake. BP holds a 34% interest and South Korea’s GS Energy (KRX: 078930) possesses a 5% stake. Japan Australia LNG, which is a joint venture between Mitsubishi (TSE: 8058) and Mitsui (TSE: 8031), hold the remaining 15% stake.

Gas produced at the Browse Gas project will be earmarked as backfill for the North West Shelf LNG plant, which is expected to produce about 11mn tonnes per year (tpy) of super-chilled fuel. Osaka Gas will be allocated around 550,000 tpy of LNG from its stake.

The Browse Gas Project received a major boost in July when the Western Australian government granted it “State Significant Project”, giving Australia’s largest undeveloped conventional gas resource the highest level of prioritisation available.

However, the project remains in the concept-definition phase and undergoing separate state and federal environmental assessments before it is granted development approval.

The planned project involves two floating production, storage and offloading vessels and an approximately 900-km pipeline carrying gas to the existing Karratha Gas Plant for processing.

While the project’s special state priority status marks a key step forward, it is still grappling with cost escalation, which has seen estimates jump from AUD27.3bn ($19.5bn) in 2019 to AUD48.7bn ($34.7bn) in May.