Australia's Woodside exits Kitimat LNG project
Australian Woodside Petroleum said May 18 it would exit the proposed 18mn mt/yr Kitimat LNG project on BC’s northern coast, choosing instead to direct available capital to higher-value projects in Australia and Senegal.
The exit will include the divestment or wind-up and restoration of assets, leases and agreements covering the 480 km Pacific Trail Pipeline route and the site for the proposed LNG facility at Bish Cove on the Douglas Channel. Woodside will retain a position in the Liard Basin upstream gas resource.
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The decision follows the 2019 announcement by its partner in the project, US major Chevron, to divest its 50% interest, and Chevron’s decision earlier this year to stop funding feasibility work. Chevron has not yet found a buyer.
“The Kitimat LNG proposal was designed to develop a new source of LNG to supply Asian markets in the latter part of this decade,” Woodside’s acting CEO Meg O’Neill said. “However, we have decided to prioritise the allocation of capital to opportunities that will deliver nearer-term shareholder value.”
The costs associated with the decision to exit Kitimat LNG are expected to impact Woodside’s 2021 net profit after tax (NPAT) by about US$40-60mn, Woodside said, and will be excluded from Woodside’s underlying NPAT for the purposes of calculating its dividend.
O’Neill said Woodside will now focus on achieving a positive final investment decision on its Scarborough LNG development in Western Australia in the second half this year and on the continued successful execution of its Sangomar oil project offshore Senegal.
“Retaining an upstream position in the prolific Liard Basin (which straddles the BC/Yukon border) provides Woodside a low-cost option to investigate future natural gas, ammonia and hydrogen opportunities in BC,” she said.