Williams Acquires Stake in Woodside’s Louisiana LNG

Woodside Energy Group Ltd has roped in another partner for the under-construction Louisiana LNG with Williams Companies Inc acquiring a minority interest and entering into an offtake agreement for 1.5 million metric tons per annum (MMtpa).

“The strategic partnership involves the sale by Woodside of a 10 percent interest in Louisiana LNG LLC (HoldCo) and an 80 percent interest and operatorship of Driftwood Pipeline LLC (PipelineCo) to Williams for a purchase price of $250 million at the effective date of 1 January 2025”, Woodside said in an online statement Thursday. “The total proceeds received are $378 million including proportionate capital reimbursement since the effective date”.

The companies expect Tulsa, Oklahoma-based Williams to invest $1.9 billion. “As part of the investment in Louisiana LNG, Williams assumes LNG offtake obligations for 10 percent of produced volumes”, Australian oil and gas company Woodside said.

“Williams’ total share of LNG production from Louisiana LNG will be 1.6 million tonnes per annum. This LNG production will be supplied to Williams under an LNG SPA [sale and purchase agreement] for approximately 1.5 Mtpa and Williams will also receive the proportionate benefit (10 percent) of the Louisiana LNG 1.0 Mtpa SPA previously signed with Uniper”, Woodside said.

It was referring to its agreement with the German power and gas utility for up to two MMtpa – one MMtpa from Louisiana LNG for 13 years and up to one MMtpa from Woodside’s global LNG portfolio for a term starting with Louisiana LNG’s start of commercial operations until 2039.

“Woodside’s total capital expenditure for the Louisiana LNG Project is now expected to be $9.9 billion reduced from $11.8 billion at final investment decision (FID)”, Woodside added.

Williams, which currently operates over 33,000 miles of pipeline and markets of over seven billion cubic feet a day of gas at the Sequent platform, will build and operate the Line 200 pipeline, part of the Driftwood Pipeline project, to the LNG terminal, according to the statement.

Woodside retains a 90 percent stake in HoldCo. HoldCo owns 60 percent in Louisiana LNG Infrastructure LLC, with the remainder owned by New York City-based Stonepeak Partners LP. Woodside also retains 20 percent in Pipeline Co.

“HoldCo will continue to lead the gas procurement strategy and execute agreements greater than 12 months”, Woodside said. “Leveraging the established Sequent platform and capabilities, a gas supply team will operationalize and optimize daily gas sourcing and balancing in accordance with HoldCo’s gas procurement strategy. Optimization value created is distributed to HoldCo. The team will be Williams-led and include secondees and oversight from Woodside”.

Woodside chief executive Meg O’Neill said, “This is Williams’ first investment in LNG and its participation in Louisiana LNG is a testament to the quality of the project”.

“The bringing together of Woodside’s proven track record in developing and operating LNG facilities and global marketing, and Williams’ expertise in pipelines and gas sourcing, creates an energy partnership that has the combined capability to realize opportunities for long-term global energy demand”, O’Neill added.

“With strong LNG contracting momentum from Louisiana LNG and our portfolio, our existing infrastructure partner New York-based Stonepeak, and our key contracting partners including Bechtel, Baker Hughes and Chart, we are on track to deliver first LNG in 2029 and create long-term value for our shareholders”.

Woodside announced a positive FID on Louisiana LNG April 29. “The forecast total capital expenditure for the LNG project, pipeline and management reserve is $17.5 billion (100 percent)”, Woodside said at the time. Stonepeak will shoulder $5.7 billion.

The Gulf Coast project has an Energy Department permit to export a cumulative 1.42 trillion cubic feet a year of natural gas equivalent, or 27.6 MMtpa of LNG according to Woodside, to both FTA and non-FTA countries.

The FID announced April is for phase 1, which involves three liquefaction trains with a combined capacity of 16.5 MMtpa.

Separately on Thursday Williams announced definitive agreements to sell its minority stake in the South Mansfield upstream project to Japanese integrated power company JERA Co Inc.

“Under JERA’s ownership, Williams will continue to gather natural gas volumes from South Mansfield and will deliver those volumes through Williams’ Louisiana Energy Gateway (LEG) system for deliveries into downstream LNG markets”, Williams said in a press release. “As part of the transaction, Williams will further expand its gathering system for South Mansfield production growth, and the volume commitment to LEG from South Mansfield will also increase”.

Williams expects to receive $398 million plus deferred monthly payments through 2029 based on a “predefined development plan”, Williams said.

It expects to complete the sale by yearend.

To contact the author, email jov.onsat@rigzone.com

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.