UPDATE: Australia’s Woodside bets on Tellurian buy to expand global LNG portfolio

• Seeks optimization opportunities
• Saudi Aramco also said interested in Tellurian
• Woodside has busy development plans

SINGAPORE (ICIS)–Australian producer Woodside Energy said it would buy all outstanding shares of US LNG developer Tellurian and Driftwood LNG for approximately $900 million at $1.00 per share in an all-cash deal for a transaction valued at $1.2 billion, according to a 22 July news release .

“It adds a scalable US LNG development opportunity to our existing approximately 10mtpa of equity LNG in Australia. Having a complementary US position would allow us to better serve customers globally and capture further marketing optimisation opportunities across both the Atlantic and Pacific Basins,” Woodside CEO Meg O’Neill said in the release.

“The Driftwood LNG development opportunity is competitively advantaged. Woodside expects to leverage its global LNG expertise to unlock this fully permitted development and expand our relationship with Bechtel, which is the EPC contractor for both Driftwood LNG and our Pluto Train 2 project in Australia.”

Tellurian’s board recommended shareholders approve the transaction and provided further details in a news release.

As reported, ICIS noted that Tellurian was in play in late June, and was said to be vying with Saudi Aramco for the project.

Tellurian has struggled for years with the proposed 27.6mtpa Driftwood project, going through management and financial changes that included cancellation of LNG supply deals.

But Driftwood, near Lake Charles, Louisiana, is a fully permitted, pre-final investment decision (FID) prospect, that includes Phase 1 (11mtpa) and Phase 2 (5.5mtpa). Woodside is likely targeting FID readiness for Phase 1 from the first quarter of 2025.

BUSY WOODSIDE

Last week, Woodside said that talks with Timor Leste (East Timor) on developing a “mutually beneficial and commercially viable “Greater Sunrise field has made progress with finer details to be unveiled in a concept Study being undertaken by Wood PL due “no later than the fourth quarter of this year.”

The Democratic Republic of Timor-Leste and the Commonwealth of Australia, along with the Sunrise Joint Venture (comprising TimorGAP (56.56%), Woodside (33.44% and Operator), and Osaka Gas (10%)) are pleased to provide an update on Greater Sunrise negotiations.”

Offshore natural gas and condensate resources were first discovered in 1974, and located near a feed gas source to Australia at Bayu-Undan, which faces declining supply.

Yet, the fields remain undeveloped as the stakeholders differ on the fiscal terms and the location of the downstream operations.

According to a report released in May 2018 by the Permanent Court of Arbitration, the pipeline from the fields would either go to the existing 3.7mtpa Darwin LNG export project in Australia or to a greenfield 5mtpa Timor LNG project at Beaco on the south coast of Timor-Leste.

The failure in reaching an agreement ended up having global portfolio major Shell and US supplier ConocoPhillips selling their shares to Timor Gas & Petroleo (Timor Gap) in late 2018.

Timor Gap senior officials have expressed their determination regarding getting gas pumped to their island as it is “essential to Timor-Leste’s future economic growth and development”.

In June, the company announced a revised leadership structure aiming for a simplified operating model to aggregate project execution, integrate traditional and new energy growth and opportunity, streamline corporate strategy activities, and establish a dedicated senior team for human resources, legal and external affairs.

In May, the Japan Bank for International Cooperation (JBIC) signed a $1 billion loan agreement with a unit of Woodside that along with loans from private financial institutions raises $1.45 billion to assist Woodside in developing the Scarborough Energy Project , according to a statement from JBIC.

The 8mtpa Scarborough energy project has targeted the first LNG cargo in 2026, according to Woodside.

(Adds Tellurian statement)