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Australian Woodside raises Brazil LNG hope

Wednesday, 22 November 2006

Woodside is targeting natural gas in the South American nation that has been slow to develop LNG plans.

Brazil's Santos and Campos Basins hold the majority of the nation's proven natural gas reserves, which total about 11 trillion cubic feet.

Petrobras, the Brazilian state-run energy company, said in its latest report that natural gas production in its domestic fields in October 2006 was 44,824 cubic metres per day, which was 4.4 percent up on the previous month and 3.5 percent more than in the same month a year ago.

Woodside said it has agreed to acquire from Spanish energy major Repsol, which is also a prominent LNG player, a 25 percent interest in nine exploration blocks in the Santos Basin. The price of the transaction wasn't disclosed.

Assignment of the interest is subject to the prior approval of Brazilian authorities, Woodside said in a statement.

The blocks, awarded to Repsol in Brazil’s 2005 licensing round, are about 180 kilometres south-east of the city of Sao Paulo in water depths of 150 metres to nearly 1,000 metres and cover over 2,000 square kilometres, the statement added.

Under the agreement with Woodside, Repsol will operate the blocks.

"Woodside’s commitment in the first exploration term of four years covers its share of three-dimensional seismic acquisition and one exploration well," Woodside said. "A one-year extension of the exploration term is possible."

The Australian company, in which Royal Dutch Shell holds a more than 30 percent stake, made no mention of LNG potential in Brazil but said the agreement was "consistent with Woodside’s strategy to have several exploration opportunities cycling through the business with significant potential upside, attractive fiscal terms and competitive entry cost."

Woodside Energy