LONDON, UK: Woodside, Australia’s largest independent oil and gas company, has announced that it has agreed to sell a 10% stake in its Scarborough gas project to LNG Japan, a joint venture between Sumitomo Corporation and Sojitz Corporation, for $500 million.
The deal is part of a broader strategic relationship between Woodside and LNG Japan, which also involves potential LNG offtake and collaboration on new energy opportunities.
The Scarborough gas project is located in the Carnarvon Basin, offshore Western Australia, and is expected to produce 8.7 million tonnes per annum of LNG from 2026. The project will involve the installation of a floating production unit and a new pipeline to connect the gas field to the Pluto LNG facility, where Woodside is currently constructing a second processing train. The project is estimated to cost $12 billion and has received final investment decision in November 2021.
The sale of the 10% stake will reduce Woodside’s interest in the Scarborough joint venture from 100% to 90%, while LNG Japan will become a new partner and a non-operating participant. The transaction is subject to regulatory approvals and is expected to be completed in the first quarter of 2024. LNG Japan will also reimburse Woodside for its share of expenditure for the Scarborough project from the effective date of 1 January 2022. The total consideration, including the purchase price, reimbursed expenditure and escalation, is estimated to be around $880 million.
In addition to the equity sale, Woodside and LNG Japan have also entered into a non-binding agreement for the sale and purchase of 12 LNG cargoes per year for 10 years starting from 2026. Woodside has also signed non-binding agreements with Sumitomo and Sojitz to explore global opportunities in new energy sectors, such as ammonia, hydrogen, carbon capture and storage, and carbon management technology.
Woodside CEO Meg O’Neill said that the deal with LNG Japan reflects the quality of the Scarborough project and the strong demand from Japanese buyers for new gas supplies. She also said that the new energy agreements with Sumitomo and Sojitz will provide further opportunities for collaboration on decarbonisation and energy security goals. She added that Scarborough will be an important source of gas for both the Western Australian and international markets, supporting domestic jobs and providing taxation revenue for the state and federal governments.
LNG Japan CEO Kyo Onojima said that he was excited to join the Scarborough joint venture and to finalise the LNG offtake agreement with Woodside. He also said that he was looking forward to working with Woodside on new energy business opportunities.
LNG Japan is a leading player in the global LNG market, with a portfolio of long-term contracts with suppliers from Australia, Qatar, Indonesia, Malaysia, Oman, Russia, Papua New Guinea and Mozambique. It also has interests in LNG projects in Australia, Qatar, Indonesia and Mozambique.
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