Meg O'Neill, the CEO of Woodside Energy, speaks during a panel discussion as top energy executives and ministers meet in Houston for the annual Gastech conference in Houston, Texas, U.S., September 17, 2024.
Woodside Energy (WDS.AX), has held talks with several potential buyers of stakes in its Louisiana liquefied natural gas plant, including Tokyo Gas (9531.T), Japan's JERA and Saudi Aramco-backed MidOcean Energy, multiple sources told.
The timing of the stake sale is a test case for buoyant market expectations around LNG with the return of Donald Trump to the U.S. presidency. Trump has said trade partners should buy more U.S. energy and issued several executive orders in his first weeks in office aimed at boosting domestic oil and gas output.
Louisiana LNG is an opportunity for global buyers to diversify their supply base and potentially fend off U.S. tariffs under the Trump administration, by increasing U.S. energy imports and narrowing the trade deficits that irk the U.S. president.
We spoke to seven people familiar with the matter. All seven sources said Tokyo Gas (9531.T), had discussions with Woodside, five of those sources said Jera held talks and four of the sources said MidOcean also had discussions.
We previously reported that Tokyo Gas was in talks for a stake. Talks with the other possible buyers have not previously been reported.
U.S. pipeline operator Williams Companies (WMB.N), also had discussions with Woodside about buying an equity stake, one of the sources added.
JERA, MidOcean Energy, Saudi Aramco and Tokyo Gas declined to comment. Williams Companies did not respond to a request for comment.
Woodside is expected to make a decision soon and has signalled it may accept several bids as it seeks to sell 50% of the first phase of the LNG export project, expected to cost roughly $16 billion to build.
The project is to be built in four phases with the first phase expected to produce 11 million metric tonnes per annum (MTPA) of the superchilled gas. When completed Louisiana LNG is expected to produce 27.6 MTPA, Woodside said.
Woodside declined to discuss the bidding, but directed to its previous comments that the project was moving as expected and had attracted strong interest from high-quality potential partners.
The LNG developer is also seeking higher prices for gas contracts, three sources said. Woodside has told buyers the premiums are higher to cover rising costs to build plants and because of the relatively low risk around future development. Woodside already has all permits secured to build the plant.
Woodside is seeking liquefaction fees of $2.70-2.90 per million British thermal unit (mmBtu) on 10-20 year deals, one source said. That is about 20 cents above current market rates. Shorter agreements would be at the higher end of the range, two sources said.
LNG plants chill natural gas until it is in liquid form, so that it can be transported on special ships. Trump has pulled back regulation on building new plants, although his tariffs on steel and other products have raised some concerns about the future costs of building the massive plants.
Woodside previously had said a decision on selling stakes in the project was expected soon. CEO Meg O'Neill in September said the company wants clarity on the partnering approach before taking a final investment decision, and expected to bring several partners into Louisiana LNG by March 2025.
It is not clear when the decision will be made, but two sources said that the bidding window had closed and another said that Woodside in early February closed its project data room, an online repository of information for investors, in a sign the process was drawing to a close.
The Australian oil and gas producer last year acquired the Louisiana LNG project in its $1.2 billion purchase of developer Tellurian Inc. Woodside changed the project name, which previously was Driftwood LNG.
