Woodside Energy Trading Singapore has signed a heads of agreement (HOA) with Commonwealth LNG to negotiate a sale and purchase agreement (SPA) for the supply of LNG.
The LNG will be supplied from Commonwealth’s proposed development at Cameron, Louisiana.
Under the HOA, Woodside will negotiate for 2 mill tonnes per annum of LNG for 20 years, scheduled to begin in 2Q26.
However, Woodside’s offtake obligation can be reduced or even eliminated if Commonwealth achieves increasing offtake commitments from other buyers. Woodside will also have an option to purchase an additional 500,000 tonnes of LNG.
Woodside CEO, Meg O’Neill, said: “This HOA with Commonwealth secures access to competitive LNG in the Atlantic Basin and provides Woodside with the ability to build market scale through acquiring low cost supply.”
Commonwealth LNG founder and CEO, Paul Varello, added. “Woodside is known throughout the industry for its keen technical oversight and commercial agility. This HOA is testament that Commonwealth’s approach to lowering the cost of LNG produced in the US is gaining prominent support.”
The HOA is non-binding and also conditional upon the negotiation and execution of a fully termed LNG SPA, all necessary approvals being obtained and a final investment decision (FID) on the proposed development.
In addition, Woodside has completed the sale of a 49% non-operating participating interest in the Pluto Train 2 joint venture to Global Infrastructure Partners (GIP).
On 22nd November, 2021 the joint venture announced its FID, contemporaneously with the FID taken for the Scarborough development.
Pluto Train 2 is a key component of the Scarborough development and includes a new LNG train and domestic gas facilities to be constructed at the existing Pluto LNG onshore facility.
The estimated capital expenditure for the Pluto Train 2 development on 1st October, 2021 was $5.6 bill (100% project).
Under the joint venture arrangements, GIP is required to fund its 49% share of capital expenditure and an additional amount of construction capital expenditure of about $822 mill. Woodside’s capital expenditure will be reduced accordingly.
The project’s first LNG cargo is targeted for 2026.
