Woodside To Sell 10% Scarborough Interest To LNG Japan For US$500 Million
Woodside Energy Group (Woodside) has entered into a sale and purchase agreement with LJ Scarborough Pty Ltd (LNG Japan) for the sale of a 10% non-operating participating interest in the Scarborough Joint Venture. The strategic relationship with LNG Japan involves three elements: equity in the Scarborough Joint Venture, potential LNG offtake, and collaboration on opportunities in new energy.
The purchase price is US$500 million, subject to adjustments. LNG Japan will reimburse Woodside for its share of expenditure for the Scarborough project from the transaction effective January 1, 2022. The transaction is expected to be completed in Q1 2024. The estimated total consideration comprising the purchase price, reimbursed expenditure, and escalation is approximately US$880 million. Completion of the transaction is subject to conditions precedent, including Foreign Investment Review Board approval, National Offshore Petroleum Titles Administrator approvals, and Western Australian Government approvals.
As part of the broader strategic relationship, Woodside and LNG Japan have entered into a non-binding head of agreement for the sale and purchase of 12 LNG cargoes per year (approximately 0.9 MTPA) for 10 years commencing in 2026. Woodside has also entered into non-binding agreements to collaborate with Sumitomo Corporation and Sojitz Corporation on global opportunities in new energy which could include ammonia, hydrogen, carbon capture and storage, and carbon management technology.
Following completion, Woodside will remain operator and hold a 90% interest in the Scarborough Joint Venture. Scarborough gas will be processed at the Pluto LNG facility, where Woodside is currently constructing Pluto Train 2. Woodside is also operator of the Pluto Train 2 joint venture and holds a 51% participating interest.
“The support of LNG Japan is testament to the quality of the Scarborough project,” said Woodside Chief Executive Officer (CEO) Meg O’Neill. “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. Our new energy agreements with Sumitomo and Sojitz provide further opportunities for us to work closely together on our shared decarbonization 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 state and federal governments. We look forward to working with LNG Japan to deliver this world-class project.”
“We are very pleased to join the Scarborough Joint Venture and are looking forward to finalizing the LNG offtake agreement and exploring business opportunities in the new energy sector,” said LNG Japan CEO Kyo Onojima.
The Scarborough Joint Venture comprises the Scarborough field and associated offshore and subsea infrastructure. The Scarborough field is located approximately 233 miles (375 km) off the coast of western Australia and the reservoir contains less than 0.1% carbon dioxide. The Scarborough project will include the installation of a floating production unit with eight wells drilled in the initial phase and thirteen wells drilled over the life of the Scarborough field. The gas will be transported for processing at Pluto LNG through a new trunkline of approximately 267 miles (430 km) in length. The final investment decision was made in November 2021 and first LNG cargo is targeted for 2026.
