LNG Japan Corp. agreed a deal worth as much as $880 million for a stake in a giant natural gas project off Australia, a new step to secure supply of a fossil fuel the nation expects to retain a key role in its energy mix.
The joint venture, owned by Sumitomo Corp. and Sojitz Corp., will acquire a 10% interest in the Scarborough operation from Woodside Energy Group. It also struck a pact for the supply from the project of 12 cargoes — or about 900,000 tons — of liquefied natural gas a year for a decade from 2026, the Perth-based producer said Tuesday.
Scarborough, which will drill gas offshore and process it at an expanded plant on the Burrup Peninsula in Western Australia, is forecast to produce as much as 8 million tons of LNG a year and has become a lightning rod for climate activists opposed to the development of new fossil fuels projects.
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“The support of LNG Japan is testament to the quality of the Scarborough project,” Woodside’s Chief Executive Officer Meg O’Neill said in a statement. “It also underscores the ongoing demand from Japanese buyers for new supplies of gas and the role of gas in supporting Japan’s energy security.”
Japan, the largest buyer of Australian LNG, has been striking new pacts with major shippers after last year’s energy crisis prompted the government to press companies to lock in supply and invest in projects. Japan and Germany used a Group of Seven summit earlier this year to call for support for new investment in gas projects.
Scarborough’s direct carbon dioxide emissions are estimated to be about 4.4 million tons a year, and that figure swells to 56 million tons if the burning of the gas by consumers, or scope 3 emissions, are included, the Australia Institute think tank said in a June report.
Woodside is seeking to reduce its ownership of the Scarborough project, while remaining the development’s operator. The producer, which rose 0.6% in Australia trading Tuesday to the highest since November, would be open to investment from Chinese consumers, O’Neill said in May.
Under the deal, LNG Japan will pay a $500 million purchase price and other amounts including reimbursements for project spending that are expected to bring the total to about $880 million, according to Woodside’s statement.
Separately, Sumitomo, Sojitz and Woodside will work on potential collaborations in areas that could include ammonia, hydrogen, carbon capture and storage, and carbon management technology under the deal.
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