Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, said its Arrow Energy Ltd. venture in Australia is in cooperation talks with competitors building liquefied natural gas projects in Queensland state.
Shell has deliberately delayed a decision to go ahead with a proposed LNG project on Australia’s east coast through its Arrow venture with PetroChina Co. amid cost inflation in the country, Shell Chief Financial Officer Simon Henry said today on a call with reporters. BG Group Plc (BG/), ConocoPhillips (COP:US) and Santos Ltd. (STO) are building three projects on Queensland’s Curtis Island at a cost of more than $60 billion.
“We are talking with all of the three current companies about the potential to cooperate,” Henry said after Shell reported a surprise increase in first-quarter profit. “Australian cost inflation is a significant challenge, not only on current projects, but future potential projects.”
Shell said in November it may delay until 2014 a decision on whether to go ahead with the Arrow venture.
Shell’s current 23 percent stake in Perth-based Woodside Petroleum Ltd. (WPL) isn’t a strategic holding, Henry reiterated. The company sold 10 percent of Woodside at A$42.23 a share in November 2010.
“While it remains non-strategic, it is valuable,” he said. “We have no intention of divesting at the wrong part of the cycle, so we’re not in any particular hurry.”
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