LNG

Woodside Energy, the operator of the Northwest Shelf LNG project and Pluto LNG in Western Australia, has completed the sale of a 10 percent non-operating participating interest in the Scarborough Gas joint venture for US$910 million to the LNG Japan group.

The completion follows Woodside’s announcement in August 2023 that it had established a strategic relationship with LNG Japan that involved equity in the Scarborough project, potential LNG offtake and collaboration on opportunities in new energy.

“The sale proceeds received by Woodside of US$910M for equity in the Scarborough Joint Venture comprise the purchase price, reimbursed expenditure and escalation,” said Woodside in a statement.

Trading houses

Woodside’s sale and purchase agreement is with a jointly owned subsidiary of LNG Japan, which is a 50-50 joint venture between two Japanese trading houses, Sumitomo Corp. and Sojitz Corp., and a Japanese state-owned agency called the Japan Organization for Metals and Energy Security (Jogmec).

The Scarborough gas field project comprises the Pluto Train 2 joint venture and modifications to Pluto Train 1 to process Scarborough gas.

The venture includes the Scarborough field itself and associated offshore and subsea infrastructure.

The Scarborough field is located 375 kilometres (233 miles) off the coast of Western Australia and the reservoir contains less than 0.1 percent carbon dioxide.

Scarborough gas will be processed at the Pluto LNG facility, where Woodside is currently constructing a second liquefaction Train .

In addition to the sale of a 10 percent non-operating participating interest to Japan LNG, Woodside additionally stated in February 2024 that it had entered into an SPA with the largest Japanese LNG importer and power company, JERA Co. Inc. for a 15.1 percent non-operating participating interest in Scarborough.

Commitment

“LNG Japan’s commitment to the Scarborough Joint Venture is a demonstration of the value our customers place on gas as a long-term source of energy as they navigate the energy transition,” said Woodside Chief Executive Meg O’Neill.

“Completion of the sale to LNG Japan is a significant milestone as we progress toward first LNG cargo from Scarborough targeted in 2026,” O’Neill stated.

“We are also pleased to welcome Japan Organization for Metals and Energy Security’s equity investment,” the CEO added.

“Jogmec’s support reflects the contribution Scarborough gas will make to Japan’s energy security,” she added.

Woodside still holds a 90 percent interest in the Scarborough venture and will remain as operator.

Following completion of the transaction with JERA Woodside’s interest will be 74.9 percent in the Scarborough venture.

After completion of the JERA deal, Woodside estimated that as of 26 March 2024, the Perth-based company’s Scarborough field proved (1P) undeveloped reserves are reduced by 128.7 million barrels of oil equivalent to 1,158.3 million barrels of oil equivalent.

Novatek, the Russian developer of the Arctic LNG II project on the Gydan Peninsula, has declared “force majeure” to some of the buyers of cargoes based in China because of delays in the start-up of the facility.

The Japan Organization for Metals and Energy Security (Jogmec), a Japanese government agency, has released the results of two annual surveys on the volumes of LNG handled by Japanese companies and the current status of the destination restrictions in LNG sales and purchase agreements.

The Russian Finance Ministry said that that the federation’s oil and gas revenues decreased by 26 percent in the first 10 months of the year amid warnings that natural gas and LNG producer Gazprom was heading for record losses and another gas company Novatek faced financial disruption to its Arctic LNG II project.

Chiyoda Corp., the leading Japanese liquefied natural gas and energy engineering company, has been awarded a contract by Japan’s Mitsubishi Corp. to study the establishment of carbon-capture and storage (CCS) value chains in Japan and elsewhere using its expertise in LNG liquefaction.

Russian natural gas company Novatek has held a ceremony with the Russia’s government to mark the launch of the first modular liquefaction Train onboard a gravity-based structure at an assembly yard in the Murmansk region and set to be towed to the Gydan Peninsula project site on the Gulf of Ob in Western Siberia.

Novatek, the Russian operator of the Yamal LNG export plant in Northern Siberia and the developer of the Arctic LNG II venture scheduled to start up in late 2023, is continuing to function despite sanctions over Ukraine and has just accepted a Russian patent for LNG processing in Arctic plants.

A US company backed by Japanese utility and LNG importer Tokyo Gas is in talks with US natural gas producer Rockcliff Energy as a possible buyer of the company from private equity firm Quantum Energy Partners for around $4.5 billion.

The transaction, which is being talked about by US investment bankers, would be another move by a Japanese company to secure natural gas assets.

This follows renewed concerns in Japan about its future energy resources since the Russian invasion of Ukraine and has led Japan’s state banking and energy agencies to support new moves by companies to expand the nation’s foreign resources base.

Tokyo Gas Natural Resources, based in Houston, Texas, is 70 percent owned by Tokyo Gas and with the balance held by Castleton Commodities International (CCI).

Tokyo Gas started acquiring its stake in CCI in May 2017 because of its natural gas assets in Louisiana and Texas, including the Haynesville shale play.

The Haynesville shale lies under parts of three southern states, including East Texas, northwest Louisiana and southwest Arkansas.

Previous deals

CCI had also previously purchased the Carthage upstream and midstream assets in East Texas from subsidiaries of the former Anadarko Petroleum Corp. for over $1 billion.

CCI subsequently combined the acquired assets with the company's existing East Texas upstream assets.

Tokyo Gas currently has volume and tolling agreements with the Cameron LNG plant in Louisiana and the Cove Point project in Maryland and is said to be considering other deals with US export projects under development in Texas and Louisiana.

Japan's Economy, Trade and Industry Minister (METI) recently oversaw deals by Japanese companies, including JERA Co Inc., the largest LNG importer, to secure future LNG supplies from Oman.

Japan had been so keen to secure enough LNG supplies during the Northern Hemisphere winter season that it asked state-run banking agencies to financially back utilities and trading companies to buy spot cargoes even at elevated prices.

The Japan Bank for International Cooperation and another state body, JOGMEC, which recently changed its name to the Japan Organization for Metals and Energy Security, have also increased their backing for energy asset transactions and are encouraging Japan's banking sector to do the same..

Novatek, the Russian energy company and developer of the Arctic LNG II project to double up on the existing Yamal LNG plant, said it was still on track for the first Train to come on stream by year-end 2023 and Japan and China would be key customers.