8th Aug 2023 06:52
(Alliance News) - Woodside Energy Group Ltd on Tuesday said it will sell off a 10% stake in its Scarborough interest to LNG Japan Corp.
The Perth-based energy company said the deal forms part of a strategic relationship with LNG Japan, which is a 50-50 joint venture between Sumitomo Corp and Sojitz Corp.
The strategic relationship entails three parts: the sale of equity in the Scarborough joint venture, potential liquified natural gas offtake, as well as collaboration on opportunities in new energy.
The Scarborough Gas Project is a field located in the Carnarvon Basin located around 375 kilometres off the coast of Western Australia. It was formerly a joint venture between Woodside and BHP Petroleum prior to Woodside's merger BHP Group Ltd's petroleum assets. The site's first LNG cargo is scheduled for 2026, and the project capacity is 8 million tonnes LNG per annum.
Woodside will sell 10% of Scarborough to LNG Japan for a total consideration of around USD880 million. This includes a purchase price of USD500 million, as well as the reimbursement of Woodside's expenses since the start of 2022. Completion is expected in the first quarter of 2024.
Once LNG Japan owns the 10% stake Woodside will hold the remaining 90% interest in Scarborough and remain as operator. The gas from the project will be processed at the Pluto LNG facility, where Woodside is building the Pluto Train 2.
Woodside and LNG Japan have also signed a non-binding heads of agreement for the sale and purchase of 12 LNG cargoes per year, which is around 900,000 tonnes a year, for ten years starting from 2026.
In addition, Woodside has provisionally agreed to collaborate with Sumitomo and Sojitz on "global opportunities in new energy". These could include ammonia, hydrogen, carbon capture and storage, as well as carbon management technology, the company said.
"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," said Woodside Chief Executive Officer Meg O'Neill.
Shares in Woodside were up 0.6% at AUD38.39 each in Sydney on Tuesday afternoon.
By Elizabeth Winter, Alliance News senior markets reporter
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