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    Woodside to sell 49% stake in Pluto Train 2 to GIP

Summary

The estimated capital expenditure for the development of the entire Pluto Train 2 project is $5.6bn, Woodside said.

by: Shardul Sharma

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Woodside to sell 49% stake in Pluto Train 2 to GIP

Australia’s Woodside has agreed to sell its 49% non-operated stake in Pluto Train 2 joint venture to private equity firm Global Infrastructure Partners (GIP), it said on November 15.

Under the sales and purchase agreement, the estimated capital expenditure for the development of the entire Pluto Train 2 project is $5.6bn, Woodside said. In addition to its 49% share of capital expenditure, the joint venture arrangements require GIP to fund an additional amount of construction capital expenditure of approximately $835mn. Woodside’s joint venture capital contributions will be reduced accordingly.

If the total capital expenditure incurred is less than $5.6bn, GIP will pay Woodside an additional amount equal to 49% of the under-spend. In the event of a cost overrun, Woodside will fund up to $835mn in respect of a 49% share of any overrun.

“The final quantum of GIP’s capital contribution is dependent on interest rate swap and foreign exchange rates on the date of the final investment decisions for Scarborough and Pluto Train 2,” the company said.

Pluto Train 2 is a key component of the proposed Scarborough development and includes a new LNG train and domestic gas facilities to be constructed at the existing Pluto LNG onshore facility in Western Australia. The development of Pluto Train 2 is expected to be supported by a long-term processing and services agreement to be entered into between the Pluto Train 2 and Scarborough joint ventures, Woodside said.

The transaction includes a number of other related agreements between Woodside and GIP including a project commitment agreement (PCA). The PCA includes provisions for GIP to be compensated for exposure to additional Scope 1 emissions liabilities above agreed baselines, and to sell its 49% interest back to Woodside if the status of key regulatory approvals materially changes.

Following completion, Woodside will hold a 51% participating interest in the Pluto Train 2 joint venture and remain as operator. The effective date of the transaction is October 1 and completion is expected to occur in January 2022.