THE WALL STREET JOURNAL: North West Shelf Slated to Undergo LNG Expansion: "Shelf operator Woodside is expanding LNG exports as demand for the fuel rises in traditional markets such as Japan and South Korea...: Monday 13 June 2005

By STEPHEN BELL
DOW JONES NEWSWIRES
June 13, 2005

PERTH, Australia -- Targeting growing energy demand in China and the U.S., Australia's Woodside Petroleum Ltd. said Friday that its partners in the North West Shelf venture have approved a A$2 billion (US$1.5 billion) liquefied-natural-gas expansion.

Coming after last year's A$2.7 billion upgrade, the latest investment means the Shelf will have doubled its LNG capacity in four years by the time the expansion is finished in mid-2008.

Shelf operator Woodside is expanding LNG exports as demand for the fuel rises in traditional markets such as Japan and South Korea and in new markets such as China and the west coast of North America. Woodside believes there is sufficient demand growth to justify the expansion, despite the Shelf partners' missing out in February on a share of South Korea's US$20 billion LNG tender.

Jack Hamilton, Woodside's director of North West Shelf ventures, said the project hopes to "extend important relationships with our current long-term customers" and to secure new LNG supply deals.

The venture is renegotiating long-term contracts -- due to expire in 2009 -- with its foundation Japanese customers. It also exports LNG to South Korea, while shipments to China are due to begin next year.

Work will begin immediately on expanding the Shelf's onshore LNG facilities in Western Australia state, following final investment decisions by all of the joint-venture participants, Woodside said.

Woodside shares rallied on the news even though the project had been flagged by the company's chief executive, Don Voelte, over the past few months. Its shares closed at a record A$27.78 each Friday, up 2.9%.

The go-ahead shows the "buoyancy of LNG demand, particularly in Asia, where the North West Shelf has an advantage over historical competitors such as the Middle East," said Rob Brierley, head of research at Patersons Securities.

"With substantial receiving terminals being built in places such as China and major infrastructure mooted for the U.S. west coast, LNG continues to gain world relevance as a source of energy," Mr. Brierley said.

Analysts believe BHP Billiton was the last Shelf partner to approve the expansion at a board meeting in China Friday.

Woodside is a one-sixth owner of the venture alongside BHP, Royal Dutch/Shell Group, Chevron Corp., BP PLC and Japan Australia LNG, itself an equal joint venture between Japan's Mitsubishi Corp. and Mitsui & Co.

Peter De Wit, executive president for Shell's gas-and-power unit, said the expansion of the project "is an example of our confidence that the Asia-Pacific LNG markets will continue their strong growth." Shell owns 16.6% in the project and has a 34.3% stake in Woodside.

The expansion will include a fifth production train to process 4.2 million metric tons of LNG a year, lifting the plant's annual capacity to 15.9 million tons, Woodside said.

Site work will start in July for the three-year project, with commissioning due to begin in mid-2008 and the first LNG cargoes planned for later that year, Woodside said.

---- Benoit Faucon in London contributed to this article.

Write to Stephen Bell at stephen.bell@dowjones.com

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