Woodside Cites Africa, Post-2022 LNG Prospects

Woodside chairman Michael Chaney has talked up its West Africa exploration strategy and also forecast strong demand for LNG in the 2020s.

In a speech to the company's annual general meeting held April 21, he said: "An example of our exploration strategy execution was the entering into an agreement with Impact Oil & Gas in February this year to acquire a 65% participating interest in a Production Sharing Contract and associated joint operating agreement in the AGC Profond block located in the joint development area between Senegal and Guinea-Bissau."

"This is a very prospective area and it builds on our other recent acreage acquisitions in Cameroon, Gabon and Morocco," said Chaney.

Woodside announced February 18 that it had become operator with 65% of AGC Profond PSC, covering 6,700 km² with water depths of 1,400m to 3,700m, while Impact will retain a 20% interest and Entreprise AGC (a state-owned entity jointly owned by Senegal and Guinea-Bissau) keeps 15%. Various gas and oil finds have offshore Senegal and Mauritania to the north in recent months, with US Kosmos discussing a possible floating LNG project.

Woodside has been active before in the region: it discovered the Chinguetti oil field offshore Mauritania in 2001 but since has exited, as production became disappointing; the field is now mooted for closure. There have been disappointments nearer home too.

CEO Peter Coleman, referring to Woodside's recent decision last month to shelve its Browse floating LNG project offshore Australia, said: "Woodside remains committed to the earliest commercial development of the world-class Browse resource and to FLNG as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time." But the Chevron-led Wheatstone LNG export project is still targeting first production in mid-2017 and "will generate significant long-term returns for Woodside shareholders," he said.

Chaney said the global LNG market was impacted by growing supply and competition, but was confident of future demand too - particularly where cleaner air is an issue: "There is broad consensus about the key role that LNG is expected to play in the future energy mix. We expect that after 2022, a total of 200mn metric tons of LNG will need to come online to meet anticipated 2030 demand. That equates to about 20mn mt/yr through project life extensions and new supply."

Woodside is a founding shareholder of Australia's Northwest Shelf LNG. Chaney also paid tribute to a former Nigeria LNG CEO, Andrew Jamieson, who stepped down April 21 from Woodside's board after 11 years, but also welcomed his replacement Ann Pickard who recently retired from Royal Dutch Shell after top management posts in charge of its Africa and Alaska upstream businesses.

Chaney said a vote by 27% of shareholders against the board's remuneration was "a disappointing result" and he defended the package but accepted the vote as "an indication of concern."

Mark Smedley