Woodside sells stake in big WA gas project to LNG Japan

Woodside has sold a 10 per cent stake in its $16.5 billion Scarborough gas project off the coast of Western Australia to a joint venture between two Japanese conglomerates.

The purchase price is at least $US500 million ($766 million) but is expected to be closer to $US880 million ($1.35 billion), Woodside said on Tuesday.

LNG Japan has agreed to buy 12 LNG cargoes per year for 10 years as part of the deal, with the first commencing when the project makes its first delivery in 2026.

Woodside CEO Meg O’Neill said the support of LNG Japan was a testament to the quality of the project.

“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,” she said.

LNG Japan is a joint venture between Japanese conglomerates Sumitomo Corp and Sojitz Corp.

Woodside and the duo are also pledging to work together to explore business opportunities in new energy, including carbon capture and storage.

Controversial with environmental groups, the Scarborough project is located 375km off the coast of WA.

Woodside is drilling eight wells in the initial phase of the project and linking them to a floating production unit, with 430km of subsea pipeline transporting the gas to the Pluto LNG refinery near Karratha.

RBC Capital Markets analyst Gordon Ramsay said the deal was a positive, helping to de-risk Woodside’s exposure to its high level of equity in Scarborough by reducing future development expenditure and technical risk.