Page 15 - AsianOil Week 47 2021

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Woodside takes FIDs on

Scarborough and Pluto LNG 2

FINANCE & AUSTRALIA’S largest oil and gas producer Industrial Area, in Western Australia. The WA
INVESTMENT Woodside has reached final investment Environmental Protection Authority (EPA) rec-
decisions (FIDs) for both the Scarbor- ommended the project for approval in Septem-
ough gas field development as well as the ber, subject to conditions including air quality.
expansion of the Pluto liquefied natural Woodside has also made progress towards its
gas (LNG) facility. proposed merger with BHP’s upstream opera-
Woodside announced the FIDs on Novem- tions, first announced in August.
ber 22, the same day it revealed that it had signed
a binding share sale agreement (SSA) with BHP Merger progress
– a Scarborough project partner – on the inde- Woodside said that under the terms of the
pendent’s merger with the mining giant’s oil and new SSA that it would issue new shares to
gas portfolio. acquire all of BHP Petroleum’s share capital.
Woodside operates the Scarborough joint With the merger slated for completion in
venture, which will supply gas from four the second quarter of next year, Woodside’s
fields estimated to hold 13 trillion cubic feet share issue is expected to comprise around
(368bn cubic metres) of 2C dry gas to the 48% of the developer’s share capital on a
expanded Pluto LNG, in partnership with post-issue basis.
BHP Petroleum. Woodside said the merger would create one
Moreover, the investment decisions come of the world’s largest independent energy pro-
just a week after the developer announced that ducers with “a high-margin oil portfolio, long-
it had agreed to sell a 49% non-operated stake life LNG assets and the financial resilience to
in Pluto Train 2 to Global Infrastructure Part- help supply the energy needed for global growth
ners (GIP). and development over the energy transition”.
O’Neill said: “Our emissions reduction tar-
Development nod gets will apply to the combined portfolio, sup-
Woodside upped the expansion project’s com- porting our aspiration to be net-zero by 2050
bined onshore and offshore development costs and our strategy to supply lower-carbon energy
by 5% in August to $12bn. to our customers across the globe.”
Pluto LNG’s onshore component, which The merged unit is also expected to deliver
involves modifying the facility’s existing lique- estimated pre-tax savings of more than $400mn
faction train to process Scarborough gas while per year from optimising corporate processes
also building a second train, will cost $6.3bn. and systems.
Bringing Scarborough on stream, meanwhile, is Even as Woodside works on absorbing BHP’s
slated $5.7bn. upstream operations, it has also made progress
Woodside said this week that the expanded on reducing its exposure to Pluto’s second train.
project’s first cargo of LNG was slated for deliv-
ery in 2026. Divestment process
“Scarborough will be a significant contrib- Woodside has agreed to sell a 49% non-oper-
utor to Woodside’s cash flows, the funding of ated stake in the Pluto Train 2 to Global Infra-
future developments and new energy products, structure Partners (GIP), the developer said on
and shareholder returns,” Woodside CEO Meg November 15.
O’Neill said. She added: “The contracting model, Under the deal, GIP has agreed to provide
development concept and execution strategy $835mn of construction capital expenditure
have been designed to reduce cost risk and pro- in addition to its 49% share of capex, reduc-
tect shareholder value.” ing Woodside’s capital contributions in the
O’Neill said the Scarborough reservoir process. Woodside, however, added that GIP’s
contained only around 0.1% carbon dioxide final capital contribution would be dependent
(CO2), adding that this would make the pro- on an interest rate swap and foreign exchange
ject one of the least carbon intensive sources rates on the date of the Scarborough and Pluto
of delivered LNG. Train 2 FIDs.
O’Neill said: “The [FID] is underpinned by If Pluto Train 2’s total capex is less than
quality customer support with approximately $5.6bn, GIP will pay Woodside an additional
60% of Scarborough capacity contracted, includ- amount equal to 49% of the under-spend.
ing domestic gas for the proposed Perdaman Woodside will, however, have to cover GIP’s
urea project.” share of any cost overrun pay up to a total of
Perdaman Industries intends to build and $835mn. Woodside has agreed to pay GIP in
operate the AUD4.5bn ($3.25bn), 2mn tonne relation to any delays to the expected start-up
per year (tpy) urea plant at the Burrup Strategic of production, under certain circumstances.™

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