Woodside Energy has revealed a sharp rise in the cost of its long-awaited Scarborough gas project off the Pilbara coast.
In a quarterly update released on Tuesday, the Perth-based energy giant said a cost and schedule review now put the price tag at $US12.5 billion ($18.85b) — up 4 per cent from the previously forecast $US12b.
It said a significant portion of the increase had been driven by “scope maturation” of necessary modifications to Train 1 at its Pluto processing facility, which will be tied into the project.
Woodside’s share of costs under the joint venture with Japanese power supplier JERA and LNG Japan is $US8.2b.
Scarborough is now 67 per cent complete and is due to ship first LNG cargo in 2026.
Woodside said a jump in revenue for the second quarter came down to timing as production slipped due to bad weather, outages at its projects and a fall in oil and gas prices.
It reported second-quarter output dropped one per cent from the previous three-month period to 44.4 million barrels of oil equivalent.
It pinned the slight fall on weather impacts at its North West Shelf plant and unplanned outages at Wheatstone and Julimar during the period.
Those declines were partly offset by higher demand at Bass Strait and first oil from its Sangomar fields off the coast of Senegal in western Africa.
But revenue for the three months was up 2 per cent to $US3.03b thanks to the timing of sales from its Pluto plant that help to ease the pain of lower realised prices, which fell 2 per cent from the previous quarter to $US62 a barrel of oil equivalent.
Chief executive Meg O’Neill said Woodside was sticking to full-year production guidance of between 185 and 195mmboe.
“We see ongoing demand for Woodside’s LNG in Asian markets, as evidenced by our long-term sale and purchase agreement with CPC Corporation, Taiwan, and the $1 billion loan agreement executed with JBIC to fund Woodside’s Scarborough Energy Project,“ Ms O’Neill said.
Woodside on Monday revealed a $US900 million deal to buy New York-listed Tellurian, developer of the proposed Driftwood LNG project on the US Gulf Coast.
Driftwood could produce almost 28 million tonnes of the fuel a year through five processing trains.
Woodside hopes to be ready for a final investment decision on stage one early next year, and to have gas flowing by 2029. The company also plans to sell half its stake to help cover the capital cost.
Ms O’Neill said the purchase would position Woodside as a “global LNG powerhouse”.
But it has raised eyebrows at Citi, with analysts questioning the deal’s rationale and noting a share of Driftwood could only be sold once the deal for Tellurian is done amid a weakening market for LNG contracts.
“If this persists over the timeframe to complete the Tellurian acquisition then it may be harder to sell down from 100 per cent working interest, leaving Woodside with more equity than they might like,” said analyst James Byrne.
Source Agencies
