Woodside, BHP agree on Scarborough gas tolling terms
Woodside Petroleum has cleared a big hurdle in its efforts to get the $16bn Scarborough LNG project off the ground.
Woodside Petroleum has cleared a big hurdle in its efforts to get the $16bn Scarborough LNG project off the ground, after it and partner BHP agreed to terms to process Scarborough gas through Woodside’s Pluto LNG plant.
The two parties late on Monday announced they had agreed on a tolling price for the Scarborough gas, alongside what they said was a “comprehensive, non-binding heads of agreement” on other tolling terms.
The development comes as Woodside prepares to have its growth ambitions scrutinised by analysts at its annual investor briefing in Sydney on Tuesday.
The $16bn Scarborough development and the proposed $30bn Browse project are the two key growth projects in Woodside’s portfolio, but both have faced hurdles in convincing project partners and securing toll treatment agreements.
The tolling agreement is conditional on BHP not exercising its right to lift its stake in Scarborough from 25 per cent to 35 per cent, which signals that the mining giant is now all but certain to not take on a bigger slice of the project.
Woodside chief Peter Coleman said the tolling price agreement was “another significant step” towards developing Scarborough. “It is a key milestone as we target a go-ahead for the development of the high-quality Scarborough gas resource through an expanded Pluto LNG facility,” Mr Coleman said.
“The joint venture is now in a strong position to proceed to FID (final investment decision) in the first half of next year.”
The deal comes less than a fortnight after Woodside reorted a 52 per cent increase in the size of the Scarborough gas resource. Woodside plans to develop a second processing train at Pluto for the gas from Scarborough.
Woodside shares closed 26c or 0.7 per cent higher to $34.25 on Monday while BHP was 8c or 0.2 per cent higher to $37.36.