Woodside Energy will pay at least $US225 million ($320 million) to increase its stake in the Browse joint venture, a $48.7 billion project 425km off the coast of Western Australia that's been under environmental review for the past seven years.
Woodside is exercising its rights to pre-empt the sale by one of its joint venture partners of its 10.67 per cent stake in the project to a third party.
PetroChina International, the listed arm of state-owned China National Petroleum Corporation, had proposed selling its stake to Inpex Corp, Japan's largest oil and gas exploration and production company.
Woodside exercising its pre-emptive rights means it will acquire the stake instead, on the same terms.
The move will increase Woodside's interest in the joint venture to 41.27 per cent, assuming no other participant exercises pre-emption rights.
BP earlier in June agreed to sell a five per cent stake in the joint venture to South Korea's GS Energy, dropping it working interest in the project to 39.33 per cent.
Woodside chief executive Liz Westcott said the current levels of interest in Browse reinforce the quality and scale of the resource.
Under a development plan, the gas at Browse would be extracted and compressed on two floating platforms operating above the gas fields.
It would then be transported via a 900km pipeline to the Karratha Gas Plant in WA, which has operated since the 1980s as part of the North West Shelf gas project.
Cutting Inpex out of the joint venture heads off a potential headache for Woodside, as the Japanese company was seen as favouring processing gas from Browse via an existing pipeline to its Ichthys LNG plant in Darwin rather than at Karratha.
"Woodside's decision to pre-empt reflects our commitment to continue progressing the proposed Browse to North West Shelf development," Ms Westcott said.
"We see this as a pathway to maximise long-term shareholder value."
Browse would contribute $56.2 billion in taxes and $141 billion to Australia's economy, and produce enough gas each year to power 800,000 homes, Woodside says.
But environmentalists say Browse would be a disaster for Scott Reef, while Woodside says the project poses no threat to the coral atoll system.
Browse is awaiting a final recommendation from the Department of Climate Change, Energy, the Environment and Water before being sent for approval to Environment Minister Murray Watt.
The project is also pending a final investment decision by the joint venture.
Ms Westcott reiterated on Friday that any investment decision would be made in accordance with Woodside's capital allocation framework.
If the joint venture makes a final decision to develop the gas fields on or before June 30, 2032, Woodside will owe PetroChina another $US175 million ($249 million) for its stake.
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