Global LNG supply glut ‘unlikely to materialize’ in coming years: Woodside CEO

A global LNG supply glut is "unlikely to materialize in the years ahead" due to projects delays that are expected to result in nearly 30 million mt/year of supply growth to slip from 2026-2029 to beyond the end of this decade, Woodside Energy CEO and Managing Director Meg O'Neill said Feb. 25.

O'Neill noted the current LNG market fundamentals are positive, with demand for the fuel staying firm amid restricted availability.

The essential drivers of global energy demand, growing population, economic development and rising living standards underpin the strong growth in LNG demand worldwide over the next decade, she said during the company's earnings briefing coinciding with the announcement of its full-year results for 2024.

Near-term global LNG supply has tightened as project delays and feed gas supply issues linger.

Emerging nations in Asia are expected to be a key driver of gas demand as those nations seek to reduce reliance on coal while maintaining grid reliability and energy security, O'Neill said.

Preliminary data indicate natural gas consumption increased 2.8%, or 115 Bcm year over year in 2024, above the 2% average growth rate between 2010 and 2020, a report by the International Energy Agency in January said.

This relatively strong growth was mainly due to the Asia-Pacific region, which accounted for almost 45% of incremental gas demand in 2024 on the back of continued economic expansion, according to the IEA report.

As nations around the world seek to build their renewable energy networks, gas will play an important role in backing up these networks and smoothing out volatility caused by periods of intermittence, O'Neill said.

There is a "sizeable opportunity for LNG suppliers to support this transition," O'Neill said. For example, switching 20% of Asia's coal-fired power stations to gas would require 310 Bcm/year of gas, she continued.

The Australian-headquartered global oil and gas producer has contracted more than 15 million mt of LNG to Asian buyers in 2024, according to a company presentation.

During the year, Woodside signed three agreements for the long-term sale of LNG to customers in Japan, South Korea and Taiwan.

Woodside on Feb. 25 reported record production of 193.9 million barrels of oil equivalent or 530 million b/d of oil equivalent, for 2024. Meanwhile, the company said in January that its 2025 production guidance stands at 186 million-196 million boe, with LNG's share set to be about 40% and pipeline gas to be around 20%.

"In 2024, the record annual production was at the top end of the full-year guidance range, underpinned by consistently strong 98% reliability at our operated LNG facilities," O'Neill said in a statement, sharing that despite an inflationary environment, the unit production cost fell 2% year over year to $8.1/boe.

"Excellent progress was made on Woodside's major growth projects, with the Scarborough Energy Project now 80% complete and on track for first LNG cargo in 2026," O'Neill said.

LNG Japan has acquired a 10% non-operating participating interest in the Scarborough Joint Venture while Japan's JERA has also acquired a 15.1% non-operating participating interest in the SJV.

Woodside has also simplified its Australian portfolio and consolidated its focus on operated LNG assets by entering into an asset swap agreement with Chevron.

"The asset swap provides Woodside with the opportunity to realign its Australian interests to provide greater commercial certainty and enhance development prospects," O'Neill said.

The company's Louisiana LNG US Gulf Coast project, fully permitted for 27.6 mt/year of LNG production, is "attracting interest from high-quality partners, and we are progressing towards readiness for a final investment decision from the first quarter of 2025," O'Neill shared.

In 2024, the company secured environmental approvals for the North West Shelf Project extension.

"We're hoping to receive Federal approval soon to underpin ongoing reliable supply from this significant asset," O' Neill said in the briefing.

Other projects

Woodside's Sangomar project in Senegal had beenramped up to nameplate capacity within nine weeks of its June 2024 startup. In Mexico, the Trion Project is more than 20% complete and targeted for first oil in 2028, O'Neill said.

The company's Beaumont New Ammonia Project in Texas, US, which it acquired in 2024, also looks promising, it said.

"The project is set to provide strong cash flows at current ammonia pricing and positions Woodside to be an early mover in the growing global market for premium lower-carbon ammonia once the associated carbon capture and storage (CCS) facility comes online," O'Neill said.

"The Beaumont acquisition also represents material progress towards achieving our Scope 3 targets, with the potential to abate up to 1.6 million metric tons per annum carbon dioxide equivalent of customer emissions when CCS is online," she said.

Construction at Beaumont is now around 83% complete, with Woodside Energy aiming for the startup of ammonia production in the second half of this year and lower-carbon ammonia production in the second half of 2026, Woodside shared.