ACCC chairwoman Gina Cass-Gottlieb said last week that while the regulatory agency would work with gas producers to answer their remaining questions, she expected producers to return to longer-term gas supply agreements before the code was finalized.
Violations of the new rules will result in hefty $50 million fines, as well as damage to the company’s reputation.
“We continue to talk to buyers through calendar year 2024 and beyond about possible delivery, but we await further guidance from the government around the mandatory code of conduct and how that is going to work to ensure we contract gas in a way that complies with that,” said Mrs. O’Neill.
She indicated that it was government intervention that derailed a deal with a major buyer that was “very close” to signing, leading the buyer to put negotiations on hold.
“I expect we will continue with the contracting that was going on once everyone in the market is clear about the rules,” she said.
Ms O’Neill has also warned of the intervention deterring needed investment in new supplies, pointing to the decision late last year by Woodside’s Bass Strait partner, ExxonMobil, to shift the planning for the venture from 12 months to six months .
“The Bass Strait joint venture is now budgeting on a semi-annual basis, recognizing again that we just have too much uncertainty to raise capital for the second half of this year,” she said.
Woodside’s record full-year production of 157.7 million barrels of oil equivalent just surpassed the target range of 153 million to 157 million barrels of oil equivalent. However, due to a price drop, sales fell from the September quarter onwards.
Sales in the December quarter fell 12 percent from the previous quarter to $5.16 billion, which Woodside attributed to reduced trading activity and lower realized prices.
The record production was the result of Woodside’s merger with BHP’s petroleum arm last June, which roughly doubled its size.
“Consistently strong operational performance and favorable operating conditions across the combined portfolio were key drivers in achieving record quarterly and full-year production,” said Ms O’Neill, noting the “exceptional” reliability of Woodside’s Australian projects, including Pluto LNG and the North West Shelf LNG Company.
The numbers were roughly in line with consensus, with shares in Woodside falling 1.1 percent to $37.33 in mid-afternoon trading.
The average price Woodside received for its products across its portfolio fell from $102/boe in the September quarter to $98/barrel.
While the average price for LNG produced rose to $20.30 per million British thermal units, the equivalent of $$128 per barrel, the price for traded LNG fell from the particularly high $32.70 in the September quarter up to $US24.2/MMBTU.
The Perth-based company kept its expectations for production this year unchanged at 180 million-190 million barrels of oil equivalent.
Ms O’Neill updated the market on the progress of new projects and said construction of the Sangomar oil project in Senegal is 77 percent complete and production is scheduled to start at the end of this year.
The $16.5 billion Scarborough and Pluto-2 project in Western Australia is 25 percent complete with the first LNG cargo still scheduled for 2026.
However, Woodside has yet to receive secondary approvals for Scarborough from the offshore petroleum regulator, which is reworking requirements for some projects following last year’s court ruling that overturned Santos’ approval of a gas project.
Woodside said cooperation with regulators on those secondary approvals “continued for offshore execution activities, with no critical path impact,” indicating that the timeline remains intact for now.
Woodside also reported that meetings were held in the quarter on the stalled Sunrise LNG project in Timor-Leste, with a view to completing a new production sharing contract needed to begin development.
Ms O’Neill said in December that Woodside had reopened consideration of an onshore Timor-Leste option to process gas from the field, having previously pushed for the gas to be processed in Darwin.
As for the proposed Trion project in Mexico, Woodside said it has taken steps this year to support a potential final investment decision. The activity included issuing competitive tenders for the drilling rig and other equipment required for the project.
Woodside last year pushed back the timing for a final green light for Trion from 2022, as proposed when the asset, which is part-owned by Mexico’s Pemex, was owned by BHP.
In the Gulf of Mexico, production of the second phase of the BP-managed Mad Dog oil project will start this year. Startup of the 140,000 barrels per day project was originally planned for 2022 when it was approved for development in February 2017.
Back in WA, Woodside also marks a likely final green light this year for the third phase of the Julimar-Brunello gas project that will supply gas to Chevron-owned Wheatstone LNG.
On the clean energy front, Woodside is working toward a final green light in 2023 for its H2OK liquid hydrogen project in Oklahoma. The project includes an initial 290 megawatt electrolyser to produce up to 90 tons per day of liquid hydrogen for heavy trucks. The final go-ahead has expired from the middle of December 2022.
Woodside also recommended that it record a pre-tax charge of approximately $872 million for the hedge it closed for 2022, to be included in “other expenses” in its full-year results on Feb. 27.