Woodside Petroleum's Pluto LNG Venture May Begin in August, Citigroup Says

Woodside Petroleum Ltd. may delay the start of the A$13 billion ($12.7 billion) Pluto liquefied natural gas project in Western Australia until August 2011 and increase its cost estimate for the venture, Citigroup Inc. said.

Australia’s second-largest oil and gas producer is evaluating Pluto’s spending and schedule and plans to give an update by the end of this month, the company said in October. Perth-based Woodside said previously that Pluto was expected to start by the end of February, and export gas before April.

The Pluto LNG venture may now begin in the middle of the third quarter of next year, Mark Greenwood, an analyst at Citigroup in Sydney, wrote in a report dated yesterday.

Pluto, one of more than a dozen proposed Australian LNG projects targeting Asian demand, is expected to become the fastest venture of its kind built, with the initial discovery of the field as recent as 2005, Woodside has said. Labor disputes have disrupted construction at the Pluto site in Karratha, about 1,600 kilometers (994 miles) north of Perth.

Woodside rose 0.4 percent to A$40.72 at 4:01 p.m. in Sydney. The benchmark S&P/ASX 200 Index declined 0.1 percent.

The producer said last year Pluto expenses would rise by as much as A$1.1 billion.

The company also said last month it was dismantling parts of towers used to burn off excess gas before the cyclone season because they fell short of design specifications.

Purchase Cargoes

The announcement of the cost review prompted analysts at firms such as JPMorgan Chase & Co., Deutsche Bank, UBS AG and Citigroup to predict delays to Pluto LNG production. Xavier Grunauer, an analyst at Nomura Holdings Inc. in Sydney, said in a note today that he expects first deliveries in July 2011.

Roger Martin, a spokesman for Woodside in Perth, declined in an e-mail late yesterday to comment on the schedule.

Woodside is obligated to deliver LNG cargoes to customers starting in early 2011, Citigroup’s Greenwood wrote. If Pluto hasn’t begun producing the gas, the company must get the cargoes from elsewhere in the market, he said. Woodside said in February it formed a plan to rely on other suppliers to fulfill commitments to buyers if the project faced delays.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.