LNG

Woodside Energy, the operator of two liquefied natural gas export plants in Western Australia and the Scarborough Gas Project for LNG expansion, is seeking support from shareholders on its climate policies and urging them to attend the April 24 annual general meeting online or in person.

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.

Woodside Energy, the leading supplier of Australian LNG cargoes to North Asia, has signed a sale and purchase agreement with the South Korean state-owned utility Korea Gas Corp. as more Asian nations seek to secure long-term supplies for energy security.

The SPA provides for the supply of around 500,000 tonnes per annum of LNG for a period of 10.5 years on a delivered basis whereby Woodside supplies the shipping.

The supply deals with the Koreans begin in 2026 and will come from Woodside’s portfolio.

“LNG delivered to Kogas under the SPA will be sourced from uncommitted volumes across Woodside’s global portfolio, including the Scarborough Energy Project which is targeting first LNG cargo in 2026,” explained Woodside.

Kogas already receives Australian LNG cargoes from other regional projects such as Gladstone LNG in Queensland.

Queensland LNG

The GLNG plant is operated by Adelaide-based Santos and Kogas is a shareholder along with French major TotalEnergies and Malaysia’s Petronas.

The state-owned Korean utility has been a long-term regional importer from nations like Indonesia and Malaysia as well as Qatar and Oman in the Middle East.

Woodside Chief Executive Meg O’Neill said that the SPA was significant as Woodside’s first long-term supply agreement into Korea, the world’s third-largest LNG market.

She said the agreement reinforced the ongoing contribution of Woodside’s LNG towards the energy security needs of major customers in the region.

“Woodside is pleased to be a long-term supplier of LNG to Kogas, a leading global energy company and one of the world’s largest LNG importers,” said O’Neill.

“This agreement is further demonstration of ongoing robust demand for Woodside’s products from major energy customers in our region,” O’Neill stated.

LNG for power

Kogas President and CEO Choi Yeon-Hye said she was pleased to conclude the SPA with Woodside.

“This SPA has enabled Kogas to enlarge the customer base in the domestic power market, reinforcing our role as a leading natural gas supplier in Korea,” she stated.

“By leveraging this SPA, we look forward to further expanding our business opportunities with Woodside in the LNG industry,” added Choi.

Kogas controls or jointly controls five out of South Korea’s seven import terminals at Incheon, Pyeongtaek, Samcheok, Tong-Yeong and Jeju.

The other two terminals are at Gwangyang and Boryeong and are used respectively by steelmaker POSCO and other utilities.

Wood, the London-listed energy engineering and consulting company formerly known as John Wood Group Plc, has secured a contract from South Korea’s Hyundai Heavy Industries for detailed engineering of the topsides facilities on LNG operator Woodside Energy's Trion Floating Production Unit (FPU) to be deployed in Mexican waters of the Gulf of Mexico.

The Australian energy industry has been unsettled by environmental activists using an Aboriginal woman and additionally citing concern for whales and managing to persuade a Federal Court to delay Woodside Energy’s US$12 billion Scarborough gas project for LNG expansion, citing seismic testing approval deficiencies.

The Scarborough gas project is one of the few moving forward in Australia and has been specially targeted by environmental activists who have now succeeded in delaying Woodside’s plans as the previously approved seismic testing programme has now been called into question.

The Australian Federal Court by a decision handed down on September 28 has invalidated approvals given to Woodside by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

Perth-based Woodside has yet to issue a formal response to the court decision.

Previous ruling

The Supreme Court of Western Australia had previously, in March 2022, dismissed two proceedings brought against the Pluto LNG and Karratha Gas Plant environmental approvals given in 2019.

In the latest hearing, Justice Craig Coleman found that NOPSEMA, did not have the statutory power to accept Woodside’s environment plan because he wasn’t reasonably satisfied that all relevant stakeholders had been consulted, including some local Aboriginals.

The Pluto LNG onshore processing facility is located on the Burrup Peninsula near Karratha in the northwest of Western Australia and the first cargo from the current single-Train facility was delivered in 2012.

The second Train planned using Scarborough field gas will have 5 million tonnes per annum of output and take total nameplate capacity to around 9.2 MTPA.

The Scarborough field is located about 375 kilometres (233 miles) off the coast of Western Australia and is estimated to contain over 11 trillion cubic feet of dry gas.

Aboriginal voice

In the Court decision to delay, the environmentalists had called on an Aboriginal woman named as Raelene Cooper to seek a court injunction to reverse the seismic testing approval, citing opposition from the “traditional custodians” of the Burrup Peninsula who seemingly had never been properly consulted.

After the ruling a statement was released on behalf of Mrs Cooper in which she said she was “elated” by the decision and described the legal win as more than a personal victory.

“I want my mob back home to be empowered by this day today. This is bigger than me,” she said. “It's about my people and our history. We've been forgotten and treated so badly,” the woman added.

“Woodside just came and told us what was happening,” she said. “They never bothered to sit down and listen to Murujuga traditional custodians about the full impacts of their Burrup hub operations on our culture and our sacred song lines,” she stated.

McDermott International, the US energy and liquefied natural gas project engineering company, has reached support agreements with more than 75 percent of secured letter of credit facility providers, funded debt creditors and equity holders stemming from its several years of debt woes.

Woodside Energy Group Ltd, the new name of Australian LNG plants operator Woodside Petroleum, and BHP Group have formally completed the merger of Woodside with BHP’s oil and gas portfolio to create a global energy company.

As a result of the merger, Woodside said it was a top 10 global independent energy company by hydrocarbon production and the largest energy company listed on the Australian Securities Exchange.

Woodside said the larger, more diversified portfolio was expected to deliver significant cash flow to help fund committed projects and shareholder returns.

Woodside Chief Executive Meg O’Neill said completion of the merger was one of the most significant events in Woodside’s 67-year history and marked the start of a new chapter for the company.

Diverse portfolio

“The merger delivers a diverse portfolio of quality operating assets, plus a suite of growth opportunities across oil, gas and new energy that promises ongoing value for our shareholders,” stated O’Neill.

Woodside has acquired the entire share capital of BHP Petroleum International and issued 914.76 million new Woodside shares to BHP, which BHP will distribute to its eligible shareholders.

Woodside will receive net cash of about US$1 billion, which includes the cash remaining in the BHPP bank accounts immediately prior to completion.

This reflects $1.8Bln of net cash flows generated by BHPP between the effective date of 1 July 2021 and completion, less $800 million representing BHP’s entitlement to cash dividends paid by Woodside over the same period.

All completion payment entitlements are subject to a customary post-completion review which may result in an adjustment.

The new Woodside shares start trading on the ASX on 2 June 2022. Trading of Woodside American Depositary Shares on the New York Stock Exchange would commence on the same date.

London trading

Woodside shares will be traded on the main market of the London Stock Exchange on 6 June 2022.

The company has commenced activities to integrate the two organisations, including standardisation of reporting across all jurisdictions.

Woodside said the updated production guidance, reserves position and other related information will be released in due course.

Woodside’s net profit after tax for the first half of 2022 will incorporate the contribution of the BHPP portfolio from completion and the accounting treatment of the BHPP portfolio will align with Woodside’s policies.

“We are focused on unlocking pre-tax annual synergies of more than $400 million as we merge the two businesses,” said O’Neill.

“It is exciting to welcome the BHP Petroleum team to Woodside Energy and start delivering on our shared vision for the future,” she added. 

McDermott International, the leading energy and LNG project engineering company with current LNG projects in the US, Canada, Qatar and Australia, has named Michael McKelvy as President and Chief Executive.

The company said he will also serve as a member of McDermott's Board of Directors.

Lee McIntire, who has been serving as interim CEO since June 2021, will continue as a member of McDermott's Board.

Nils Larsen, Chairman of McDermott's Board, said McKelvy was joining McDermott at a pivotal time for the company as significant contract wins reflect increasing demand for energy.

“His track record of international leadership and award-winning engineering, procurement and construction expertise will guide McDermott's talented global workforce as the momentum builds,” stated Larsen.

McDermott's current LNG contracts include among others, Qatar’s LNG expansion, Woodside Petroleum’s development of the Scarborough gas project for Pluto LNG in Western Australia and the Woodfibre project in Western Canada.

Arab Gulf

McDermott is also working on three prestigious contracts for the Saudi Arabian Oil Company (Aramco) covering four oil and natural gas fields in the Arabian Gulf.

McDermott said that McKelvy had spent more than three decades working in the engineering and construction industry across the US and international markets, including Europe and the Middle East.

He previously led Gilbane Building Company as President and CEO since 2014 where he was instrumental in record growth, profitable operations and a strong customer commitment.

“McDermott's business model and commercial strategy carve out a unique position to further capitalize on the changing industry dynamics and facilitate the energy transition,” said McKelvy.

“I am eager and enthusiastic to join this already-robust leadership team and continue their progress to strengthen the portfolio and forge a new path for the industry,” he stated.

Prior to joining Gilbane, McKelvy spent 26 years at energy consultants CH2M Hill where he held multiple leadership positions and ultimately became Chief Delivery Officer of the company.

In this position, he was responsible for project execution across all domestic and global regions with oversight of risk, safety, security, procurement and quality.

He spent his early career in operations as an architect and project manager at C.H. Guernsey & Company and Lockwood Greene, which became part of CH2M Hill.

Woodside Petroleum, the operator of two LNG export plants in Western Australia, posted a 12 percent first-quarter increase in oil and gas production, though prices were down 20 percent along with revenues from the same three months a year ago.

Woodside, one of the biggest regional suppliers of LNG cargoes to North Asia, reported sales revenue of US$1.08 billion for the quarter ended March 31, down from US$1.36Bln a year earlier.

Production came to 24.2 million barrels of oil equivalent, up from 2.17M boe as the company mitigated the impacts of Tropical Cyclone Damien during the quarter.

Total LNG output for Woodside rose 4.5 percent to 18.31M boe from 17.53 boe in the prior-year quarter.

At the same time, Woodside like all other companies in the industry implemented responses to the combined effects of the Covid-19 outbreak and lower commodity prices.

Woodside’s first-quarter one-sixth share of LNG sales at the North West Shelf plant in Western Australia came to 606,577 tonnes, down from 652,246 tonnes in the same quarter of 2019.

The Perth-based company’s sales from its stake in the Chevron-operated the Wheatstone plant in the Pilbara region of Western Australia rose to 236,185 tonnes from 175,932 tonnes in the 2019 quarter.

At Woodside’s single-Train Pluto LNG plant sales amounted to 1.163 million tonnes in the quarter, up on last year’s 1.107MT.

“Tropical Cyclone Damien, which crossed the Western Australian coast in February, was the most significant weather event ever to pass over Woodside’s production facilities on the Burrup Peninsula,” stated Woodside Chief Executive Peter Coleman in the company's first-quarter report.

“Despite the severity of the storm, the team put in an outstanding effort to ensure the safety of our people and our assets and restore normal operations in a matter of days,” added the CEO.

“Nevertheless, revenue for the quarter was impacted by reduced trading activity and lower realised prices due to Covid-19 and an unprecedented combination of oversupply and short-term demand destruction,” stated Coleman.

“Of course, most of the quarter was overshadowed by the growing threat of the Covid-19 pandemic, which has required us to take swift and decisive action to protect our workforce, communities and operations,” he said.

Coleman noted that the company had already made “tough but prudent decisions” to ensure the financial integrity of the business with spending cuts in 2020 of 50 percent.

“A targeted final investment decision on our Scarborough and Pluto Train 2 developments has been deferred from this year to next,” said Coleman.

“We made solid progress on our near-term growth projects during the quarter, taking FID on Sangomar Field Development Phase 1 in Senegal and the North West Shelf’s Greater Western Flank Phase 3, as well as making significant execution progress on Pyxis Hub and Julimar-Brunello Phase 2,” he added.