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UPDATE 1-Japan's Mitsui, Mitsubishi to buy Australia LNG stake for $2 bln

Tue, 1st May 2012 03:14

SYDNEY, May 1 (Reuters) - Japan's Mitsui & Co and

Mitsubishi Corp will jo
intly buy a 14.7 percent stake

in an Australian LNG project from Woodside Petroleum

for $2 billion, underscoring Japan's demand for gas in the face

of a drastically reduced nuclear power generating capacity.

The announcement of the deal in a Australian Securities

Exchange filing sent Woodside shares up more than 4 percent to a

near two month high. By 0030 GMT, the shares were trading 4.1

percent higher at A$36.33 ($37.82).

The two firms agreed to buy the Woodside stake through a

company called Japan Australia LNG (MIMI Browse)Pty Ltd that

would give them a 16 interest in Woodside's East Browse and 8.1

percent in West Browse ventures.

They also agreed to take 1.5 million tonnes of gas a year

from the project, and offered Woodside help with getting

competitive finance from Japanese banks for the Browse project,

estimated by analysts as likely to cost around A$30 billion ($31


Woodside said its stake in the project will fall to 31.3

percent from 46 percent. It will remain the operator of the


'The level of interest shown during this process reflects

the strong ongoing demand for LNG from premium developments such

as this,' Woodside Chief Executive Peter Coleman said in the


Japan, the world's largest liquefied natural gas (LNG)

importer, is racing to secure gas supplies as LNG substitutes

lost nuclear capacity.

Japan's nuclear capacity, which previously accounted for

about a third of the country's electricity production, has

slowly been taken offline since the Fukushima crisis last year

triggered nuclear safety concerns.

Japanese firms have stakes in at least five other Australian

LNG projects, and are said to be eyeing the stake sale in BG's Curtis gas project.

Australia has $200 billion of proposed liquefied natural gas

export projects with plans to add more than 80 million tonnes

per annum (mtpa) of LNG production before the end of the decade

to become the world's leading LNG exporter, surpassing Qatar.

A deal would finalise the auction process Woodside announced

in January after receiving approaches from several companies

and allows Woodside to extract early value from the project.

It also adds some certainty to project that has been dogged

by a dispute among the its partners --Shell, BP,

Chevron, and BHP Billiton -- over the

best location to process the gas.

There is also mounting external opposition to building a gas

processing plant at James Price Point, which is favoured by


Last month, Australia gave partners in the Browse project

off its western coast more time to reach a final investment

decision, as attempts are made to end in-fighting and quell

opposition from environmentalists and landowners.

($1 = 0.9606 Australian dollars)

(Reporting by Narayanan Somasundaram; Editing by Lincoln Feast

and Eric Meijer)


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