Woodside Energy Group Ltd has secured a sale and purchase agreement (SPA) with Korea Gas Corporation (KOGAS) to supply liquefied natural gas (LNG) to Korea.
The agreement is for the supply of approximately 0.5 million metric tons per annum of LNG for a period of 10.5 years on a delivered basis starting in 2026, subject to customary conditions precedent.
The LNG will be sourced from uncommitted volumes across Woodside’s global portfolio, including the Scarborough Energy Project, which is targeting its first LNG cargo in 2026, the company said in a news release Wednesday.
According to Woodside CEO Meg O’Neill, this is Woodside’s first long-term supply agreement into Korea, the world’s third largest LNG market.
“Woodside is pleased to be a long-term supplier of LNG to KOGAS, a leading global energy company and one of the world’s largest LNG importers”, O’Neill said. “This agreement is further demonstration of ongoing robust demand for Woodside’s products from major energy customers in our region”.
“Our LNG can help customers such as KOGAS meet their energy security needs, while also supporting regional decarbonization goals”, she added.
“This SPA has enabled KOGAS to enlarge the customer base in the domestic power market, reinforcing our role as a leading natural gas supplier in Korea”, KOGAS President and CEO Choi Yeon-hye said. “By leveraging this SPA, we look forward to further expanding our business opportunities with Woodside in the LNG industry”.
According to the release, KOGAS was established in 1983 and is one of the world’s biggest LNG buyers. The company imports LNG mainly from Australia, the USA and the Middle East. KOGAS is also engaged in the overseas upstream sector, LNG production projects, and the downstream sector through 38 projects in 20 countries.
This is the second LNG deal that Woodside has signed in the past week. Earlier, the Perth-based company and Japan’s JERA Co., Inc. entered into a non-binding heads of agreement for the sale and purchase of six liquefied natural gas (LNG) cargoes on a delivered ex-ship basis per year for 10 years starting in 2026 from Woodside’s global portfolio.
Woodside is also selling a non-operating participating interest in the Scarborough joint venture (JV) to JERA Scarborough Pty Ltd, a wholly owned subsidiary of JERA, for an estimated total consideration of $1.4 billion. The total consideration is composed of the purchase price of approximately $740 million plus a reimbursement to Woodside for JERA’s share of expenditure incurred from the transaction effective January 1, 2022. Completion of the transaction is expected in the second half.
The Scarborough field is located approximately 233 miles (375 kilometers) off the coast of Western Australia and the reservoir contains less than 0.1 percent carbon dioxide. Scarborough gas will be processed at the Pluto LNG facility, where Woodside is currently constructing Pluto Train 2.
Woodside on Tuesday posted $1.7 billion in net profit for 2023, down 74 percent compared to 2022 as weaker oil and gas prices and higher costs offset increased sales and production. However, its focus on LNG paid off as it produced a company record of 187.2 million barrels of oil equivalent (MMboe) in 2023, according to a separate news release.
To contact the author, email rocky.teodoro@rigzone.com
What do you think? We’d love to hear from you, join the conversation on the Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.