Origin Energy could get boost from Browse talks

Last week Woodside Petroleum (ASX: WPL) reportedly held a meeting with its joint venture partners regarding the huge Browse gas project.

In April, Woodside’s management announced that having completed a technical and commercial evaluation of the proposed onshore Browse LNG Development at James Price Point in Western Australia, “that the development concept does not meet the company’s commercial requirements for a positive final investment outcome.”

The decision led Woodside to instead suggested that a floating offshore plant could be economically viable. With the onshore project expected to cost tens of billions of dollars, an offshore plant would be a blow to the WA economy, which stands to benefit significantly more from an onshore operation.

While conclusive details are yet to emerge from the meeting, should further delays in agreeing on a path forward ensue, this could benefit other key gas projects due to come on stream earlier. Origin Energy (ASX: ORG) and Oil Search (ASX: OSH) both have significant late stage LNG developments which would no doubt benefit from delayed production of the Browse LNG Development.

Foolish takeaway

Supply and demand dynamics in commodities are notoriously difficult to analyse and a delayed supply from Browse would provide no more than a temporary benefit to competitors. That being said, the dynamics of the Australian gas market and the size of the Browse project are such that investors will watch developments closely.

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Motley Fool contributor Tim McArthur owns shares in Origin Energy.

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