By Adwitiya Srivastava
(Reuters) -Woodside and Chevron (NYSE:CVX) said on Thursday they would streamline oil and gas operations in Western Australia through a stake swap deal, a move resulting in the Australian energy giant exiting the $34 billion Wheatstone LNG project.
Under the asset swap deal, Chevron would sell its interest in North West Shelf venture and take over all of Woodside (OTC:WOPEY)'s interest in Wheatstone and an affiliate gas project. The deal would also see the U.S. energy major paying up to $400 million to Woodside.
"This transaction simplifies our portfolio, improving our focus and efficiency by consolidating our position in our operated LNG assets," said Woodside CEO Meg O'Neill.
Woodside's shares were down 1.7%, in line with broader losses in the Australian energy sub-index.
Woodside, Australia's top oil and gas producer, will thereby depart from Wheatstone. It had struck a deal in 2015 to buy into the project.
Woodside's stake in North West Shelf would increase to 50%.
"The asset exchange will suit both companies' interests for future development," said Brad Smoling, managing director at Smoling Stockbroking.
"Focusing on some assets in their own respective backyards makes good common sense in these fluid times in the energy sector."
The deal signifies the end to Chevron's four-decade-old participation in the North West Shelf venture, which is till date Australia's largest LNG exporter. The development comes as Chevron ramps up efforts to consolidate its focus on key Australian assets, including the Gorgon LNG venture.
The deal also comes a few days after Woodside Energy received environmental approval from the Western Australian state to prolong the North West Shelf liquefied natural gas project until 2070.
The transaction still remains subject to approvals on competition and by the foreign investment board, and is not expected to be completed until 2026.