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Woodside Power, the Australian firm seeking to remodel itself into a worldwide liquefied pure fuel powerhouse, goals to construct a “dream group” of traders to again its US enlargement because it bets that demand for the gasoline will proceed to develop quickly over the subsequent decade.
Australia’s largest oil and fuel developer introduced a shock $1.2bn takeover of struggling US LNG developer Tellurian this week, strengthening its foothold in a consolidating American vitality market.
Woodside chief government Meg O’Neill mentioned on Tuesday she hoped to shut the deal rapidly, permitting the Australian firm to hunt outdoors traders for Tellurian’s improvement of a Louisiana export terminal.
Because the Perth-based firm launched a second-quarter replace, she advised the Monetary Instances that latest stake gross sales in its giant Scarborough undertaking off the coast of Western Australia had set a precedent for its means to usher in companions for Tellurian’s $25bn Driftwood undertaking.
“We’ll be capable to put collectively a dream group of companions,” she mentioned. Japanese clients JERA and LNG Japan have acquired stakes in Scarborough, whereas World Infrastructure Companions has additionally invested within the offshore undertaking.
Woodside has focused US LNG offers since its 2022 merger with BHP’s oil and fuel arm, in line with O’Neill. She added that the Tellurian takeover supplied a chance for the Australian firm to “management our future” somewhat than shopping for a minority stake in present tasks.
James Byrne, an analyst with Citi, mentioned in a observe that Woodside could face an “uphill battle” on the deal’s deserves, as the worth of LNG contracts has been deflating. “If this persists over the timeframe to finish the Tellurian acquisition then it might be more durable to promote down from 100 per cent working curiosity, leaving Woodside with extra fairness than they could like,” he mentioned.
O’Neill mentioned that Woodside stays “extraordinarily bullish” on LNG with 50 per cent development in demand forecast over the subsequent decade, regardless of the push by some international locations, together with Australia, to scale back fossil gasoline use and improvement. O’Neill mentioned she anticipated “great demand” to proceed in Asia and Europe.
Nevertheless, improvement has grow to be costlier. Woodside mentioned on Tuesday that the price of creating Scarborough, which is two-thirds full and attributable to ship its first fuel in 2026, has risen 4 per cent to $12.5bn due to design modifications wanted.
O’Neill mentioned that inflation had performed an element in the fee enhance however she was assured the undertaking can be delivered on the new funds, regardless of some analysts predicting that the ultimate price might rise once more. “We might not count on any additional price pressures,” she mentioned.
Woodside shares dipped nearly 3 per cent after its second-quarter replace.
O’Neill additionally mentioned that the Tellurian acquisition wouldn’t alter its dividend coverage, regardless of the elevated capital expenditure of creating the US undertaking.