Woodside closes 20-year LNG deal
Woodside Petroleum will proceed with a deal to buy 850,000 tonnes of LNG annually from US exporter Corpus Christi Liquefaction.
Woodside Petroleum will proceed with a 20-year deal to purchase 850,000 tonnes a year of liquefied natural gas from Corpus Christi Liquefaction, a subsidiary of US LNG export player Cheniere Energy.
The deal was first announced in the middle of last year, but was dependent on a series of conditions being met, including the construction of two production units at the Corpus Christi project in Texas.
Approval from Cheniere for the construction of two trains at the project came this week.
In all, the Corpus Christi project in Texas is planned to include up to three LNG trains and produce around 13.5 million tonnes of LNG annually.
Despite a sharp fall in global oil prices since the deal was first flagged in mid-2014, Woodside (WPL) said today there are no changes to the terms of offer outlined at that time.
LNG will be purchased on a free-on-board basis, with the price payable by Woodside set at 115 per cent of the monthly Henry Hub price plus $US3.50 per million British thermal unit (MMBtu). This is in line with contracts signed with the other buyers from the Corpus Christi LNG project.
The 20-year agreement includes an extension option of up to an additional 10 years and a mechanism that gives Woodside the option to forgo deliveries with sufficient notice through the payment of $US3.50 per MMBtu for cancelled quantities.
Cargoes to Woodside from the second train at the project are expected to start in 2019.
Woodside chief executive Peter Coleman said the new volume would boost the group’s LNG portfolio.
“These volumes complement Woodside’s existing portfolio and provide a very strong base for Woodside to leverage new volumes from Browse, Kitimat and other sources of supply,” Mr Coleman said.
At 12.25pm (AEST) Woodside shares were 0.07 per cent lower at $34.685, against a benchmark index drop of 0.73 per cent.
Business Spectator