By James Paton - Oct 25, 2010 1:14 PM GMT+0800 Mon Oct 25 05:14:14 GMT 2010
Woodside Petroleum Ltd. may need a “diplomat rather than an explorer” to overcome obstacles to developing natural gas projects after Chief Executive Officer Don Voelte retires, Goldman Sachs & Partners Australia Pty said.
Australia’s second-largest oil and gas producer will require a “talented negotiator” to work with the East Timor government, landowners in the Kimberley wilderness region, gas suppliers and its largest shareholder, Royal Dutch Shell Plc, Sydney-based Goldman analysts Aiden Bradley and Mark Wiseman wrote in a report.
“The key to delivering value from Woodside’s resource base will likely lie in its ability to strike deals with a wide variety of stakeholders,” the analysts wrote in the Oct. 22 report. “The ability to cement these deals has been Woodside’s major weakness in recent years and the reason why the share price is currently trading closer to A$40 than A$60.”
Voelte, CEO since April 2004, plans to retire in the second half of next year after the A$13 billion ($12.9 billion) Pluto liquefied natural gas project begins production, Woodside said Oct. 13.
The Perth-based company increased 1 percent to A$43.94 by the 4:10 p.m. close in Sydney, compared with a 1.3 percent gain for the benchmark S&P/ASX 200 Index.
“At times, it has seemed to us that Woodside has preferred to create a competitive rather than a collaborative environment when dealing with some of the largest oil and gas companies in the world,” such as Chevron Corp., the analysts said.
Roger Martin, a Woodside spokesman, declined to comment.
‘Tortoise and Hare’
Chevron’s gas exploration campaign has been more successful than Woodside’s, Goldman Sachs said. Chevron, the operator of the A$43 billion Gorgon LNG venture off northwest Australia, appears to have enough gas to expand the project to five processing units from three, the analysts wrote. Chevron also may have enough gas to expand its proposed Wheatstone LNG development to four units from two, according to the report.
“The tortoise, at this stage in the race, looks to have overtaken the hare,” the analysts wrote.
Pluto is set to become the fastest LNG venture developed, with the initial discovery of the field in 2005, Woodside says on its website. The company delayed a decision to expand the project until 2011 after its exploration campaign progressed slower than expected, Voelte, 57, said in August.
Exploration to support an expansion will continue next year, and Woodside remains in talks with other gas resource owners in the Carnarvon Basin to feed the venture, it said Oct. 22.
East Timor Clash
Woodside has clashed with East Timor over how to develop the Sunrise LNG project. Woodside and its partners in the $30 billion Browse LNG project early this year chose a site in the Kimberley area to process the gas. The Western Australia state government moved to take over the site for the venture following the failure of local indigenous groups with claims to the land to reach agreement, Premier Colin Barnett said in September.
Woodside’s relationship with 34 percent-shareholder Shell is expected to be another priority for a new CEO, the Goldman analysts wrote.
Shell is a partner with Chevron in the Gorgon project, and if The Hague-based company opts to participate in Wheatstone, that “would potentially place it in direct competition with Woodside’s plans to expand Pluto,” they said.
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