Australia's Woodside Energy has entered agreement with Japan’s largest power generation company JERA for the sale of 15.1% non-operating participating interest in the Scarborough gas field development project offshore Australia.
The total consideration of the acquisition of the project is estimated to be approximately $1.4 billion, which comprises the purchase price and reimbursement to Woodside for JERA’s share of expenditure incurred up to completion, effective from January 1, 2022.
Completion of the transaction is subject to conditions, including obtaining permits and approvals, and is expected in the second half of 2024.
Woodside and JERA have also entered into a non-binding heads of agreement (HOA) for the sale and purchase of six LNG cargoes on a delivered ex-ship basis per year for 10 years starting in 2026 from Woodside’s global portfolio.
The transaction also includes an option for JERA to acquire a 15.1%-non-operating participating interest in the Thebe and Jupiter fields as well as a non-binding agreement that outlines a long-term collaboration to pursue opportunities for additional feed gas and joint investment in offshore gas fields for future tieback to the Pluto LNG facility via Scarborough infrastructure.
In addition, the companies have signed a non-binding memorandum of understanding (MoU) to explore collaboration in decarbonization initiatives. Moving forward, JERA will be evaluating potential collaboration with Woodside in areas such as ammonia, hydrogen, and carbon capture and storage (CCS).
Following completion of the sale equity of JERA, Woodside will hold a 74.9% interest in the Scarborough joint venture and remain as the operator.
“JERA’s participation in Scarborough joint venture, which will also include LNG Japan, is a further demonstration of the importance of the project to Japanese customers and confidence in long-term demand,” said Meg O’Neill, Woodside’s CEO.
“Solving the world's energy issues requires deep collaboration to tackle challenges one by one with reliable partners. I look forward to further developing our relationship with Woodside, a global player in LNG, and to promoting new initiatives to achieve decarbonization,” added Yukio Kani, JERA Global CEO and Chair.
The Scarborough gas field is located off the northwest coast of Western Australia in Commonwealth waters. Natural gas produced from the Scarborough field will be transported via a subsea pipeline to the Pluto LNG facilities for the production of LNG. The composition of the Scarborough gas is very low in CO2, at less than 0.1%.
The annual LNG production expected from the Project is approximately 8 million tonnes per annum (Mtpa) at its peak rate. JERA will off-take an equity share of approximately 1.2 Mtpa of LNG cargoes. The final investment decision for the project was made in November 2021, and the first cargo is targeted for 2026.