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Shell has cancelled a $4.6bn contract with South Korean shipbuilder Samsung Heavy Industries for three floating LNG units for Australia’s $40bn Browse floating liquefied natural gas (FLNG) project.

The news comes after Woodside Petroleum announced its decision in March 2016 to put the Browse development on hold due to low oil prices.

Front-end engineering and design (FEED) work for the project is already complete.

Shell’s decision to call-off the FLNG order was not unexpected.

Shell and Samsung signed a deal for the three floating production facilities in June 2015.

The three units each have a capacity of around 3.6 million metric tonnes a year, and were to be based on Shell’s technology.

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"The three units each have a capacity of around 3.6 million metric tonnes a year."

Samsung said in a regulatory filing that the contract from Shell was voided due to the existing tough market conditions.

Woodside has 30.6% participating interest in the Browse project. Remaining partners are Shell Australia (27%), BP Developments Australia (17.33%), Japan Australia LNG (14.40%) and PetroChina International Investment (10.67%).

The company plans to take final investment decision during the second half of 2016 and intends to pursue further capital efficiencies for the Browse project.

Woodside will work with the joint venture participants to prepare a new work programme and budgeting to proceed with development activities.

The new programme is aimed at evaluating concept select phase activities for the development.


Image: The Browse FLNG development is located 425km north of Broome, Western Australia. Photo: courtesy of Shell.