Woodside to sell 10% Scarborough interest to LNG Japan

Woodside has agreed to sell a 10% non-operated interest in the Scarborough project to LNG Japan Corp. for $500 million, subject to adjustments.

LNG Japan, a 50-50 joint venture between Sumitomo Corp. and Sojitz Corp., will reimburse Woodside for its share of Scarborough project expenditure from the transaction effective date of Jan. 1, 2022. On completion of the deal—expected in first-quarter 2024 subject to conditions and approvals—the estimated total consideration comprising purchase price, reimbursed expenditure, and escalation is about $880 million.

The Scarborough project comprises Scarborough field and associated offshore and subsea infrastructure. The field lies in Carnarvon basin about 375 km off the coast of Western Australia and is estimated to contain more than 11 tcf of dry gas.

Development includes installation of a floating production unit (FPU) with eight wells drilled in the initial phase and 13 wells drilled over the life of the field. Gas will be transported for processing at the Pluto LNG plant on the Burrup Peninsula, where Woodside is currently constructing Pluto Train 2, through a new 430-km trunkline. The project is expected to produce up to 8 million tonnes/year (tpy) of LNG and up to 225 terajoules/day of domestic gas for an initial period of 20 years. 

As part of a broader partnership, Woodside and LNG Japan have entered into a non-binding agreement for 12 LNG cargoes per year (about 0.9 million tpy) for 10 years beginning in 2026.

Woodside also entered into non-binding agreements to collaborate with Sumitomo and Sojitz to explore new energy opportunities which could include ammonia, hydrogen, carbon capture and storage (CCS), and carbon management technology, Woodside said.

Following deal close, Woodside will hold a 90% operated interest in the Scarborough joint venture. Woodside is also operator of Pluto Train 2 with 51% interest. Global Infrastructure Partners holds the remaining 49% (OGJ Online, Nov. 15, 2021).

Scarborough construction update

The Scarborough and Pluto Train 2 project is 38% complete, Woodside said in its second-quarter earnings release July 19.

Scarborough upstream pipeline manufacturing is complete, with pipeline coating ongoing. Ramp up of the FPU fabrication for both the topsides and hull continued in the second quarter. Pluto Train 2 module fabrication and foundation site works progressed, and the accommodation village in Karratha, which will service the Pluto Train 2 construction workforce, is complete.

The final investment decision on the project was made in November 2021 (OGJ Online, Dec. 6, 2021). First LNG cargo is targeted for 2026.