Woodside to Sell 10% Stake in Scarborough Project to LNG Japan

Scarborough project location - Credit: Woodside (file image)
Scarborough project location - Credit: Woodside (file image)

Australian oil and gas giant Woodside has agreed to sell a 10% stake in the Scarborough joint venture in Australia to LJ Scarborough Pty Ltd (LNG Japan).

The Scarborough Joint Venture comprises the Scarborough field and associated offshore and subsea infrastructure. The Scarborough field is located approximately 375 km off the coast of Western Australia.

The Scarborough project will include the installation of a floating production unit with eight wells drilled in the initial phase and thirteen wells drilled over the life of the Scarborough field. The gas will be transported for processing at Pluto LNG through a new trunkline of approximately 430 km in length. The final investment decision was made in November 2021 and first LNG cargo is targeted for 2026.

The purchase price is US$500 million. LNG Japan will reimburse Woodside for its share of expenditure for the Scarborough project from the transaction effective date of January 1, 2022. 

On completion of the transaction, expected in the first quarter of 2024, the estimated total consideration comprising the purchase price, reimbursed expenditure. and escalation is approximately US$880 million. 

Completion of the Transaction is subject to conditions precedent, including Foreign Investment Review Board approval, National Offshore Petroleum Titles Administrator approvals, and Western Australian Government approvals.

12 LNG Cargoes Per Year

Woodside and LNG Japan Corporation have entered into a non-binding heads of agreement for the sale and purchase of 12 LNG cargoes per year (approximately 0.9 million tonnes per annum) for 10 years starting in 2026. 

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

Following completion, Woodside will hold a 90% interest in the Scarborough Joint Venture and remain as operator. Scarborough gas will be processed at the Pluto LNG facility, where Woodside is currently constructing Pluto Train 2. 

Woodside is also operator of the Pluto Train 2 Joint Venture and holds a 51% participating interest. 

LJ Scarborough Pty Ltd is currently a wholly owned subsidiary of LNG Japan Corporation, which is a 50:50 joint venture between Sumitomo Corporation and Sojitz Corporation. 

Woodside CEO Meg O’Neill said: “The support of LNG Japan is a testament to the quality of the Scarborough project. It also underscores the ongoing demand from Japanese buyers for new supplies of gas and the role of gas in supporting Japan’s energy security. 

“Our new energy agreements with Sumitomo and Sojitz provide further opportunities for us to work closely together on our shared decarbonization and energy security ambitions. “Scarborough will be an important source of gas for both the Western Australian and international markets, supporting domestic jobs and providing taxation revenue for the State and Federal Governments. 

“We look forward to working with LNG Japan to deliver this world-class project,” she said. LNG Japan CEO Kyo Onojima said he was excited to form the strategic relationship between LNG Japan and Woodside. 

“We are very pleased to join the Scarborough Joint Venture and are looking forward to finalizing the LNG offtake agreement and exploring business opportunities in the new energy sector,” he said. 

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