Woodside completes Scarborough stake sale

Woodside Energy has completed its sale of a 10 per cent interest in the Scarborough LNG project to Japanese interests, as the project’s development continues.

The sale to LJ Scarborough, announced in August last year, will inject close to $1.4 billion into Woodside’s coffers and sets non-binding parameters for the sale of 12 LNG cargoes each year for a decade starting in 2026.

The parties have also agreed to work together on new energy opportunities.

Woodside chief executive Meg O'Neill said the company welcomed the completion of the deal.

“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,” she said.

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

When announced last year, LJ Scarborough was owned by LNG Japan – a 50:50 joint venture between Sojitz Corporation and Sumitomo Corporation.

Since then, the Japan Organization for Metals and Energy Security (JOGMEC) has taken a 49.9 per cent stake in LJ Scarborough.

JOGMEC is a Japanese state-backed entity with several LNG interests in Australia.

“We are also pleased to welcome Japan Organization for Metals and Energy Security’s equity investment in LJ Scarbrough Pty Ltd,” Ms O'Neill said.

“JOGMEC’s support reflects the contribution Scarborough gas will make to Japan’s energy security.”

The completion of the sale means Woodside has a 90 per cent interest in Scarborough, which will reduce to 74.9 per cent on completion of a second deal to sell 15.1 per cent of Scarborough to Japanese power generator JERA.

That deal, worth more than $2.1 billion, is expected to settle in the second half of the year.

The sale’s completion comes as work progresses on the Pluto stage two gas plant in Karratha in preparation for Scarborough’s production.

The LNG plant at Pluto was in 2022 connected to the Karratha Gas Plant – which supplies the domestic gas pipeline – using an interconnector.

In a speech to the Australian Domestic Gas Outlook conference in Sydney today, Woodside executive vice president Mark Abbotsford revealed the company was on the cusp of a new agreement to supply more gas to Western Australia.

“In 2023, Woodside’s WA assets produced 76 petajoules of gas, representing approximately 19 per cent of the state’s domestic gas supply,” he said.

“But like gas markets around the world, Western Australia’s is finely balanced, and supply shortfalls have been forecast to occur as early as this year.

“As part of our ongoing and steadfast commitment to WA, we are in the process of finalising arrangements with the state to make more gas available for the WA market very soon.”

Woodside has been a target of some major gas users at the state’s ongoing domestic gas inquiry, who have accused the company of not acting on the state’s 15 per cent gas reservation policy for offshore gas projects in good faith.

Mr Abbotsford said Woodside believed the proposed additional supply to the WA market would assist to largely address projected shortfalls in WA across 2024 and 2025.

Woodside shares were up around one per cent at 1.20pm, trading at $30.38 per share.