Source : THE AGE NEWS
Australian oil and gas giant Woodside has launched a major expansion push in the United States after signing off on the construction of a $27 billion export terminal that will liquefy more American gas and ship it to the rest of the world.
Perth-based Woodside on Tuesday gave the final clearance to start building the mega-project on the US Gulf Coast, which will convert gas into super-chilled liquefied natural gas (LNG) and load it onto ships to sell across the globe from 2029.
Woodside has made a final investment decision on a giant new LNG terminal in Louisiana.Credit: Bloomberg
The $US17.5 billion ($27 billion) project marks a significant bet on ongoing demand for fossil fuels even as the world tackles climate change, while providing a boost to Donald Trump’s ambition to exert American “energy dominance” across the world by helping cement the United States’ position as the biggest global LNG supplier.
Since returning to the White House, Trump has ordered the US withdrawal from the Paris Agreement on global warming and is seeking to unwind support for renewable energy and electric vehicles. Instead, under the slogan “drill, baby, drill”, Trump has signed a slew of orders aimed at making it cheaper and easier for companies to produce fossil fuels, and has been calling on other nations to buy more American LNG as a way to win reprieves from his aggressive tariffs.
The Louisiana LNG project – an under-construction export terminal that Woodside bought last year for $1.2 billion – forms a key part of the ASX-listed energy giant’s efforts to diversify its operations away from its flagship LNG operations in Western Australia, which supply mainly customers across Asia.
Once completed, the terminal will dramatically strengthen Woodside’s foothold in the Atlantic Basin, boost exposure to LNG buyers in Europe and position it as an LNG “powerhouse”, accounting for more than 5 per cent of global supplies of the fuel, the company said.
Woodside CEO Meg O’Neill at Karratha Gas Plant.
“Louisiana LNG is a game-changer for Woodside,” chief executive Meg O’Neill said.
“The marketing opportunities Louisiana LNG offers across the Pacific and Atlantic basins leverages Woodside’s proven LNG marketing capabilities and complements our established position in Asia.”
However, Woodside’s decision to invest in Louisiana LNG comes at a time of heightened uncertainty in volatile global energy markets, which are reeling from Trump’s imposition of sweeping tariffs this year and the intensifying risk of an all-out trade war between the US and China.
The impact that Trump’s tariffs may have on the Louisiana LNG project is not yet known. Last week, O’Neill told investors Woodside was still assessing how tariffs may affect building costs for the terminal, which will need metals and other materials from outside the US.
Jointly funded by Woodside and its New York-based partner, Stonepeak, Louisiana LNG will be the single biggest direct foreign investment in Louisiana’s history.
For Woodside, it also represents its biggest bet yet that global demand for LNG will grow rather than diminish in the coming decades, despite the transition to cleaner energy.
Woodside expects Asia’s population growth and economic development to drive a 50 per cent rise in LNG demand by 2034. It also believes LNG will be key to hitting global decarbonisation goals, as governments and utilities step up efforts to cut emissions by replacing coal-fired power with less-emitting gas plants.
Other forecasts, however, warn the role of LNG in the transition could be far more limited, especially if more countries follow through on ambitions to reduce the use of all fossil fuels in their power grids, and double down on electrifying the economy.
In a historic uprising last year, 58 per cent of Woodside’s shareholders voted to reject its decarbonisation strategies as inadequate, while many voiced concerns about the potential risks of developing more oil and gas projects.
Market Forces, a shareholder activist group affiliated with Friends of the Earth, criticised Woodside’s decision to proceed with its “risky” Louisiana LNG terminal, warning it would add greenhouse gases into the atmosphere for another 40 years and was at odds with global efforts to arrest climate change.
