PetroChina may exit natural gas projects in Australia and oil sands in Canada to stem losses and divert funds to more lucrative sites in the Middle East, Africa, and central Asia, reported Reuters, citing people with knowledge of the matter.
The potential sales over the next two years follow an internal review of PetroChina’s global portfolio that started last year, two sources told the news agency.
PetroChina’s divestitures are driven more by the assets’ disappointing economics than any fear of US sanctions as it does not own any oil and gas assets in the US, though political strains with Australia and Canada also played a part, noted the sources. PetroChina is a Chinese oil and gas company and is the listed arm of state-owned China National Petroleum Corporation (CNPC).
“Australian gas assets – both Arrow Energy and Browse — are considered among the top ‘negative assets’ in PetroChina’s global portfolio. It’s also an area where CNPC has little competitive edge,” said one of the sources.
PetroChina bought Arrow Energy in 2010 for $2.5 billion via a joint-venture with Shell, in its first investment in Australia’s coal seam gas sector. It purchased BHP’s stake in Browse, Australia’s largest untapped gas resource, in 2013 for $1.63 billion.
The company is also looking to offload the wholly-owned MacKay River Oilsands and Dover Oilsands projects in Canada because of losses producing and processing the tar-like fuel into bitumen, the sources added.
Arrow is PetroChina’s largest loss-making overseas investment. Browse is technologically challenging and unlikely to start producing until 2030, if it even receives final approval, noted Reuters.
Arrow only made a final investment decision to develop the 5-trillion-cubic-feet Surat Gas Project in Queensland in 2020. It was held back by a dispute between PetroChina and Shell over the pricing of gas to a Shell-operated export facility, Reuters has reported. Between 2018-2021, Arrow reported around A$3.3 billion ($2.29 billion) in losses, including A$2.2 billion in impairments.