Australia's Woodside Energy is focused on securing potential equity partners to support the Driftwood LNG export project in Louisiana, instead of signing long-term supply contracts to finance the project as the developer targets a final investment decision on the terminal in early 2025, CEO Meg O'Neill said Sept. 17.
The company, which expects to close its acquisition of project developer Tellurian in October, is already in talks with potential counterparties, O'Neill told reporters on the sidelines of the Gastech conference in Houston. However, Woodside does not intend to set any firm targets for the offtake contracts necessary for commercially sanctioning of Driftwood, saying the company's financial strength provides the advantage of being able to advance the export facility without relying on project financing.
"One of the ways we're different from many of the US LNG players is that we have the balance sheet to finance it ourselves, and we have the ability to take the LNG into our own portfolio," O'Neill said. "So we're not focused on LNG offtake agreements. We're much more focused on getting the right equity partners and bringing the dream team together."
Woodside is still determining how much equity it will sell down from the project but aims to retain at least 50%, according to O'Neill.
Woodside agreed to acquire Tellurian in July for an implied enterprise value of about $1.2 billion. The proposed export facility, with a total permitted capacity of 27.6 million metric tons per year, has struggled to reach a final investment decision since Tellurian was founded in 2016. Woodside is targeting an FID on the first 11 MMt/y phase of the project in the first quarter of 2025.
O'Neill described three categories of potential partners interested in the project, including US gas producers, infrastructure players such as US pipeline companies, and "strategic partners" with existing relationships with Woodside.
The Australian oil and gas company announced signing a supply deal with one such partner earlier on Sept. 17 -- Japan's JERA. Under the sale and purchase agreement, which finalized a preliminary deal announced in February, JERA will buy 400,000 t/y of LNG from Woodside's global portfolio, to be delivered ex-ship for a period of 10 years.
Before Woodside formally invites partners into a joint venture, the company plans to update the price of its engineering, procurement and construction contract with Bechtel.
O'Neill described the lack of any binding supply deals tied to Driftwood as one of the features that attracted Woodside to the project, as well as Tellurian's work in securing the necessary permits for the facility and its efforts to de-risk the site by starting early construction in March 2022.
"We're not burdened by offtake commitments to third parties," O'Neill said.
Acquiring Driftwood is part of the company's efforts to build out its global LNG portfolio, O'Neill said, adding that would open the door for a variety of contracting structures around different price indexes.
"We would expect to keep a significant portion of the LNG -- probably our equity stake -- in our own portfolio," and then look to place the volumes with end-users, O'Neill said.
The executive drew a contrast with the approach of many other US LNG developers marketing LNG volumes on a free-on-board basis to offtakers who get the opportunity to make the upside from selling the fuel to downstream customers.
"We want the ability to access those end markets," O'Neill said.
