Woodside,the nation’s largest oil and gas producer, for the sale of a 15 per cent stake in the under-construction Scarborough gas field off Western Australia,and for the supply of six liquefied natural gas (LNG) cargoes from the project from 2026. In August,Woodside between Japan’s Sojitz Corporation and Sumitomo.
The Woodside-operated North West Shelf Project Karratha Gas Plant on Burrup Peninsula near Dampier in Western Australia.Krystle Wright
Woodside chief executive Meg O’Neill said an uptick in long-duration LNG contracts across the industry demonstrated confidence in long-term gas demand and the need for projects to develop additional sources of supply.
“The world will struggle without these sorts of investments,” she said. “These[agreements] are a clear signal of the market’s need.”
However,the expansion of Australia’s multibillion-dollar LNG industry has attracted environmental concerns because it is a major source of greenhouse gas emissions,including methane,which scientists warn must be urgently reduced to combat the worst impacts of global warming.
Woodside’s Scarborough project off the coast of WA,expected to begin production in 2026,has been a particular focus for climate campaigners in Australia who are fighting to halt the expansion of new fossil fuel projects,and has been embroiled in legal challenges and environmental protests.
The Perth-based company is headed for a fresh climate challenge at its next investor meeting after setting a new 2030 target for clean energy investments on Tuesday that organisations including Market Forces and the Australian Conservation Foundation argued was inadequate.
Market Forces,an affiliate of Friends of the Earth,said the target to green-light new projects capable of abating 5 million tonnes of carbon dioxide by 2030 was dwarfed by the scale of Woodside’s plans to massively increase its “Scope 3” emissions – the emissions released when the gas it sells is burned by customers across the world.
“Woodside’s own figures estimate the Scarborough project alone will produce 28 million tonnes of Scope 3 emissions,” Market Forces chief executive Will van de Pol said.
Woodside has a goal of net-zero emissions by 2050,but faced a shareholder revolt in 2022 when 49 per cent of investors at its annual general meeting voted against the company’s climate efforts as inadequate in a non-binding poll. Woodside’s climate action plan,detailing how it will operate in a carbon-constrained future,will be put to a vote again this year,while Woodside chairman Richard Goyder will also be up for re-election.
Woodside chief Meg O’Neill says a rise in long-duration LNG contracts shows confidence in long-term gas demand.Louie Douvis
The release of Woodside’s updated climate goals on Tuesday came as the company posted a steep fall in full-year profit on the back of a downturn in global fossil fuel prices.
Prices for one-off LNG sales in Asia had soared to unseen levels in 2022 after deepened a historic energy crisis and unleashed a global scramble for spare shipments of the super-chilled fuel. However,prices retreated in 2023 as the supply crunch eased and China’s weaker-than-expected economic recovery weighed on energy demand.
Woodside’s bottom-line profit of $US1.6 billion ($2.5 billion) for 2023 was just a quarter of what it earned the prior year. The result was dragged down by a 30 per cent fall in prices of its oil and gas,and writedowns at its Shenzi project in the Gulf of Mexico and the Wheatstone LNG project in Western Australia.
Stripping out one-off costs,Woodside’s underlying earnings were 37 per cent lower,beating market analysts’ forecasts. The company announced a final dividend of US60¢ a share,down from the $1.44 declared for 2022.
Suhas Nayak,a portfolio manager Allan Gray,which owns Woodside shares,said the dividend was better than had been expected. “It was also good to see a strong balance sheet,which is about to get even stronger because of the sell-down in Scarborough,” he said.
Commonwealth Bank mining and energy commodities strategist Vivek Dhar on Tuesday said LNG prices were now at their lowest levels in nearly four years,trading below $US8.50 per million British thermal units,after reaching as high as $US18.60 in October.
He said Europe had emerged as a key driver of LNG markets following the onset of war in Ukraine because European nations needed to buy up LNG to compensate for lower pipeline gas from Russia.
This year’s LNG price falls mirrored the decline in European gas futures contracts due to healthy stockpiles,he said.
“Storage[in Europe] is currently tracking at approximately 64 per cent of capacity,well above the five‑year average (2019 to 2023) of approximately 47 per cent for this time of year,” Dhar said
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