Australia's Woodside in talks with at least three partners for Louisiana LNG, sources say

Sojitz

17/02/2025 23:00

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      Woodside close to selecting partners for Louisiana LNG
project
    

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      Potential partners include JERA, Tokyo Gas, and MidOcean
Energy
    

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      Woodside seeks higher-than-market liquefaction fee 
    

  
    By Marwa Rashad, Emily Chow, Curtis Williams, David French
       LONDON/SINGAPORE/HOUSTON/NEW YORK, Feb 18 (Reuters) -
W oodside Energy  WDS.AX  has held talks with several potential
buyers of stakes in its Louisiana liquefied natural gas plant,
including Tokyo Gas  9531.T , Japan's JERA and Saudi
Aramco-backed MidOcean Energy, multiple sources told Reuters.
The timing of the stake sale is a test case for buoyant market
expectations around LNG with the return of Donald Trump to the
U.S. presidency. Trump has said trade partners should buy more
U.S. energy and issued several executive orders in his first
weeks in office aimed at boosting domestic oil and gas output.
Louisiana LNG is an opportunity for global buyers to diversify
their supply base and potentially fend off U.S. tariffs under
the Trump administration, by increasing U.S. energy imports and
narrowing the trade deficits that irk the U.S. president.
    Reuters spoke to seven people familiar with the matter. All
seven sources said Tokyo Gas  9531.T  had discussions with
Woodside, five of those sources said Jera held talks and four of
the sources said MidOcean also had discussions.
  
    Reuters previously reported that Tokyo Gas was in talks for
a stake. Talks with the other possible buyers have not
previously been reported.
     U.S. pipeline operator Williams Companies  WMB.N  also had
discussions with Woodside about buying an equity stake, one of
the sources added.
JERA, MidOcean Energy, Saudi Aramco and Tokyo Gas declined to
comment. Williams Companies did not respond to a request for
comment.
     Woodside is expected to make a decision soon and has
signalled it may accept several bids as it seeks to sell 50% of
the first phase of the LNG export project, expected to cost
roughly $16 billion to build.
    The project is to be built in four phases with the first
phase expected to produce 11 million metric tonnes per annum
(MTPA) of the superchilled gas. When completed Louisiana LNG is
expected to produce 27.6 MTPA, Woodside said.
Woodside declined to discuss the bidding, but directed Reuters
to its previous comments that the project was moving as expected
and had attracted strong interest from high-quality potential
partners.
    The LNG developer is also seeking higher prices for gas
contracts, three sources said. Woodside has told buyers the
premiums are higher to cover rising costs to build plants and
because of the relatively low risk around future development.
Woodside already has all permits secured to build the plant.
    Woodside is seeking liquefaction fees of $2.70-2.90 per
million British thermal unit (mmBtu) on 10-20 year deals, one
source said. That is about 20 cents above current market rates.
Shorter agreements would be at the higher end of the range, two
sources said. 
    LNG plants chill natural gas until it is in liquid form, so
that it can be transported on special ships. Trump has pulled
back regulation on building new plants, although his tariffs on
steel and other products have raised some concerns about the
future costs of building the massive plants. 
Woodside previously had said a decision on selling stakes in the
project was expected soon. CEO Meg O'Neill in September said the
company wants clarity on the partnering approach before taking a
final investment decision, and expected to bring several
partners into Louisiana LNG by March 2025.
    It is not clear when the decision will be made, but two
sources said that the bidding window had closed and another said
that Woodside in early February closed its project data room, an
online repository of information for investors, in a sign the
process was drawing to a close.
The Australian oil and gas producer last year acquired the
Louisiana LNG project in its $1.2 billion purchase of developer
Tellurian Inc. Woodside changed the project name, which
previously was Driftwood LNG.    

(Reporting by Marwa Rashad in London, Emily Chow in Singapore,
Curtis Williams in Houston and David French in New York;
additional reporting by Yuka Obayashi in Tokyo and Yousef Saba
in Dubai; editing by Peter Henderson and Nia Williams)
((mailto:emily.chow@thomsonreuters.com; Reuters Messaging:
rm://emily.chow.thomsonreuters.com@reuters.net/))