Australia's Woodside has struck a deal to sell a 15.1% stake in the Scarborough LNG project to JERA-the biggest power utility in Japan.
The deal is valued at $1.4 billion and will secure long-term liquefied gas supply to JERA's clients.
Per Woodside, the sale would include a payment of $740 million as a price tag plus reimbursement for the money the Australian company had already spent on the development of the offshore project since 2022.
This is the second stake in Scarborough that Woodside sells to a Japanese utility in less than a year. In August 2023, the Australian energy major sold 10% in Scarborough to LNG Japan for $880 million. In addition to the stake, LNG Japan was set to get as part of the deal 12 LNG cargoes of 900,000 tons each annually from Scarborough.
The JERA deal also includes LNG cargo deliveries, to the tune of six annually for a period of ten years, beginning in 2026, Woodside said in the news release on the deal.
Japan is almost exclusively dependent on energy imports for its consumption and liquefied natural gas is one of the country's chief forms of energy imports. The country is also the largest buyer of LNG from Australia because of its proximity, which makes the purchases more affordable.
After the second stake sale, Woodside will remain the holder of a 74.9% stake in the Scarborough project. Investment in the facility is seen at $12 billion, with first cargo targeted for 2026. The Scarborough facility will have an annual capacity of 8 million tons of liquefied natural gas.
Woodside recently forecasted that LNG demand will continue growing on a global scale driven by Asia's rising consumption, the need for security of energy supply, and decarbonization.
"The world's demand for Woodside's products is expected to be resilient in the coming decades as populations and economies grow, with our target markets in Asia driving primary energy demand," chief executive officer Meg O'Neill said on the company's investor briefing day in November last year.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More