Woodside to sell 10% stake in Scarborough to LNG Japan for $500mn

Australian energy company Woodside has agreed to sell a 10% stake in the $12bn Scarborough LNG project offshore Australia to LNG Japan for $500mn, it announced on August 8.

LNG Japan, which is a 50-50 joint venture between Sumitomo Corporation and Sojitz Corporation, will also reimburse Woodside for its allocated expenditure related to the Scarborough project, dating back to January 1, 2022.

Completion of the transaction is expected in the first quarter of 2024, culminating in an estimated total consideration of approximately $880mn. The consummation of this deal is contingent upon several conditions precedent, including regulatory approvals.

Woodside has also signed a non-binding heads of agreement with LNG Japan for the sale of 12 LNG cargoes annually for a duration of 10 years, beginning in 2026.

Additionally, Woodside is actively pursuing non-binding agreements to collaborate with Sumitomo Corporation and Sojitz Corporation in the exploration of global opportunities within the new energy landscape. These ventures may encompass areas such as ammonia, hydrogen, carbon capture and storage (CCS), and carbon management technology.

The Scarborough joint venture centers around the Scarborough field, an offshore reservoir located approximately 375 km off the coast of Western Australia. The Scarborough project envisions the installation of a floating production unit, a substantial well-drilling effort, and the establishment of a new trunkline spanning roughly 430 km.

The final investment decision was made in November 2021, with the commencement of LNG cargo targeted for 2026. Woodside will maintain a 90% interest in the Scarborough joint venture and will continue to operate the project.