Woodside has approved its Scarborough LNG project despite growing opposition from environmental groups, as the energy giant announced its $40 billion deal to absorb BHP’s petroleum assets via an all stock merger had been finalised by both companies boards.
Woodside chief executive Meg O’Neill said the decision to proceed with Scarborough and finalising the BHP deal were landmark achievements for Woodside.
“Today’s decisions set Woodside on a transformative path,” Ms O’Neill said in an ASX release.
“Scarborough will be a significant contributor to Woodside’s cash flows, the funding of future developments and new energy products, and shareholder returns.”
BHP, which owns 26.5 per cent of the Scarborough project, has also approved the investment
The Conservation Council of WA released in November a long list of incomplete regulatory approvals for the project that will produce gas from the new offshore Scarborough gas field to be supplied to a new LNG train at Woodside’s Pluto LNG plant 400 km away.
CCWA executive director, Maggie Wood, said her group was angry that Woodside and BHP were “pursuing this climate-destroying development.”
“The coordinated national campaign against Scarborough gas will continue to apply pressure on this development, its investors and its buyers,” Ms Wood said.
The Perth-based LNG giant also announced after trading closed on Monday the execution of agreements with BHP for the scrip purchase of the miner’s oil and gas assets, announced in August, that will see BHP shareholders own 48 per cent of the new entity.
Ms O’Neill said the BHP oil and gas acquisition would deliver enduring value for Woodside and
“Woodside and BHP’s respective oil and gas portfolios and experienced teams are better together.” Ms O’Neill said.
“The combination will deliver the increased scale, diversity and resilience to better navigate the energy transition.
“We will have the balance sheet, cash flow and financial strength to help fund planned developments in the near-term, invest in future energy opportunities and return value to our shareholders through the cycle.”
The merger faces opposition from some major shareholders concerned that Woodside may pay too much for BHP’s assets that come with multi-billion dollar decommissioning costs, particularly from its half-share in ExxonMobil’s Bass Strait facilities.
Selling out of oil and gas would mark the most significant shake-up of BHP’s portfolio in several years and an acceleration of BHP chief executive Mike Henry’s retreat from planet-heating fossil fuels. The miner – whose top commodities are iron ore and copper – is facing mounting pressure from large investors and wider society to take greater action to decarbonise.
The deal must be approved by Woodside shareholders in a vote planned for the June quarter of 2022.
Author: Peter Milne
Image: Gas from the Scarborough field would be processed at Woodside’s Pluto LNG plant near Karratha. Woodside