(Reuters) - Woodside Petroleum <WPL.AX> and BHP Group <BHP.AX> agreed on the tolling price for processing gas from the Scarborough offshore field in Western Australia, in a significant step for developing the proposed LNG Burrup Hub.
The breakthrough follows months of talks between the two companies over what to charge for processing gas from the field through Woodside's Pluto LNG plant. Woodside holds an 85% stake and BHP the rest in the $11 billion Scarborough project.
The agreement comes as Woodside races to get approvals from its partners for about $34 billion of new oil and gas projects, and looks to reach final investment decisions (FIDs) over the next year at an oil project in Senegal as well as the Browse and Scarborough gas projects off Australia.
"It is a key milestone as we target a go-ahead for the development of the high-quality Scarborough gas resource through an expanded Pluto LNG facility. The joint venture (with BHP) is now in a strong position to proceed to FID in the first half of next year," Woodside CEO Peter Coleman said on Monday.
Woodside had in October pushed out the final approval date for its mammoth Browse project but advanced plans for its Pluto LNG expansion and smaller Scarborough to the first half of 2020 - the latter being dependent on reaching a tolling price deal with partner BHP.
The regional LNG Burrup Hub aims to develop some 20 to 25 trillion cubic feet of gross dry gas resources from the Scarborough, Browse and Pluto projects.
Coleman has previously said that Woodside risks losing leases, potential customers and the best contractors if it fails to lock down its projects.
BHP, the world's biggest miner, was not immediately available to comment on the agreement.
(Reporting by Devika Syamnath in Bengaluru; Editing by Shri Navaratnam and Himani Sarkar)
