Woodside and BHP have will proceed with the $16.5 billion Scarborough project off Western Australia—the biggest oil and gas development to be built in Australia in a decade—after signing a binding share sale agreement for the merger of BHP’s oil and gas portfolio with Woodside.
Woodside will acquire the entire share capital of BHP Petroleum International Pty Ltd (BHP Petroleum) in exchange for new Woodside shares. On completion, the merger will create a global top 10 independent energy company by production and the
largest energy company listed on the ASX.
Woodside also announced it had approved the Scarborough project and the associated upgrade of its Pluto liquefied natural gas facility on the Burrup Peninsula, near Karratha.
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The decision comes after environmental groups attempted to block the development, with the Conservation Council of WA last week launching legal action, claiming the project required assessment under federal law.
Responding to Woodside’s ASX announcement, Greenpeace Australia Pacific CEO David Ritter said the move “reeked of desperation”.
“The International Energy Agency, one of the world’s most conservative energy bodies, has said that there should be no new coal or gas projects, and yet here is Woodside, like a bunch of vandals in the night, trying to rush this monstrous project through. Woodside is treating Australians, and in particular the people of Western Australia, with contempt,” he said.
“Public outrage at what Woodside has planned—the threats to whales, the marine environment, the WA coastline and the climate—will continue to grow. For so long as the company persists on this course, the corporate name of Woodside will become synonymous with the destruction of everything that Australians hold dear.”
Woodside CEO Meg O’Neill said approving the Scarborough project was a landmark achievement for Woodside.
“Today’s decisions set Woodside on a transformative path. Scarborough will be a significant contributor to Woodside’s cash flows, the funding of future developments and new energy products, and shareholder returns.
“This capital efficient development leverages Woodside’s existing infrastructure and our proven expertise in project execution. The contracting model, development concept and execution strategy have been designed to reduce cost risk and protect shareholder value.
“The Scarborough reservoir contains only around 0.1 per cent carbon dioxide, and Scarborough gas processed through the efficient and expanded Pluto LNG facility supports the decarbonisation goals of our customers in Asia.
“The final investment decision is underpinned by quality customer support with approximately 60 per cent of Scarborough capacity contracted, including domestic gas for the proposed Perdaman urea project.
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“Developing Scarborough delivers value for Woodside shareholders and significant long-term benefits locally and nationally, including thousands of jobs, taxation revenue and the supply of gas to export and domestic markets for decades to come,” she said.
Conservation Council of WA executive director Maggie Wood said environmental groups would continue to fight against Scarborough.
“We are, of course, disappointed at this news. However, this is far from over. The coordinated national campaign against Scarborough gas will continue to apply pressure on this development, its investors and its buyers,” she said.
“Scarborough is a disaster for our climate, for our iconic marine life and for globally significant Aboriginal heritage on the Burrup Peninsula.”