LA Private

Woodside to sell 10% in Scarborough JV to LNG Japan

In a strategic move to bolster its position in the global energy market, Woodside (ASX:WDS) has announced a landmark agreement with LNG Japan. The deal comprises three key elements: equity in the Scarborough Joint Venture, potential LNG offtake, and collaboration on ventures in the emerging new energy sector.

Woodside’s CEO, Meg O’Neill, welcomed LNG Japan to the Scarborough Joint Venture, stating, “The support of LNG Japan is testament to the quality of the Scarborough project. It also underscores the ongoing demand from Japanese buyers for new supplies of gas and the role of gas in supporting Japan’s energy security.”

Under the sale and purchase agreement, Woodside is set to sell a non-operating participating interest of 10% in the Scarborough Joint Venture to LNG Japan, represented by LJ Scarborough Pty Ltd. The purchase price for the stake amounts to US$500 million, with adjustments applied accordingly. Additionally, LNG Japan will reimburse Woodside for its share of expenditure on the Scarborough project from 1st January 2022, to the present.

Upon the successful completion of this Transaction, projected for the first quarter of 2024, the total consideration will amount to approximately US$880 million, encompassing the purchase price, reimbursed expenses, and escalation. However, the deal’s completion is contingent upon fulfilling conditions precedent, including approvals from the Foreign Investment Review Board, National Offshore Petroleum Titles Administrator, and the Western Australian Government.

As part of their extended collaboration, Woodside and LNG Japan Corporation have established a non-binding heads of agreement for the sale and purchase of 12 LNG cargoes per year, equivalent to around 0.9 million tonnes per annum, over a ten-year period starting from 2026.

In addition to the LNG offtake agreement, Woodside has entered into non-binding agreements with Sumitomo Corporation and Sojitz Corporation to explore collaborative opportunities in various new energy sectors. The agreements encompass ammonia, hydrogen, carbon capture and storage (CCS), and carbon management technology.

Following the Transaction’s completion, Woodside will retain a 90% interest in the Scarborough Joint Venture and continue its role as the operator. The Scarborough gas reserves will be processed at the Pluto LNG facility, where Woodside is currently constructing Pluto Train 2. The company also operates the Pluto Train 2 Joint Venture and holds a 51% participating interest.

Woodside’s CEO, Meg O’Neill, expressed her enthusiasm for the new partnership with LNG Japan, saying, “Our new energy agreements with Sumitomo and Sojitz provide further opportunities for us to work closely together on our shared decarbonisation and energy security ambitions. 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. We look forward to working with LNG Japan to deliver this world-class project.”

LNG Japan’s CEO, Mr. Kyo Onojima, reciprocated the excitement, acknowledging the strategic relationship formed between LNG Japan and Woodside. He expressed eagerness to finalise the LNG offtake agreement and explore further business opportunities in the new energy sector.

As both companies forge ahead with this transformative partnership, they are poised to play a pivotal role in shaping a sustainable and dynamic energy future. The collaboration underscores the commitment of both Woodside and LNG Japan to contribute to a greener and more secure energy landscape.