Woodside Energy has played down forecasts of an LNG supply glut as it backed in gas and oil to still be providing the lion’s share of its earnings well into the 2030s.
Australia’s biggest independent energy company told investors on Wednesday that fossil fuels were expected to account for 90 per cent of Woodside next decade as it tipped production to jump at least 50 per cent to 300 million barrels of oil equivalent by 2032.
Chief executive Meg O’Neill said the growth would be dominated by existing and new oil and gas projects in the US and Australia, supplemented by “focused” investments in new energy opportunities.
The combination, she told an investors’ briefing in Sydney, would lit net operating cash flow from $US5.8 billion in 2024 to $US9b in 2032 – a compound annual growth rate of 6 per cent – helping lay “a pathway” for Woodside to lift dividends by at least 50 per cent.
Despite opposition from environmentalists and some shareholders concerned about continued production of fossil fuels making it harder to achieve global climate goals, Woodside insists that gas, in particular, is needed as a transition fuel to cleaner energy sources.
Ms O’Neill said on Wednesday that Woodside believed oil would “continue playing a significant role” in global energy, while demand for LNG would keep growing and ammonia would figure more.
The company saw particular potential for increased gas sales in its flagship markets of Southeast Asia and China, she said, citing forecasts that global LNG demand will grow 60 per cent by 2035.
However, with Woodside commissioning the $16 billion Scarborough LNG project in WA next year and developing a bigger LNG project in Louisiana, Ms O’Neill also questioned some market forecasts that the new production will trigger a supply glut over the next few years that would reduce demand and hurt prices.
She said the market “is very elastic and has significant capacity to absorb incremental supply coming on line”.
Also, the scepticism in some quarters was counter to the LNG sales deals signed by Woodside with customers for every one of the next five years.
“If those customers thought the market was going to be awash in LNG, they would not be signing up for long-term offtake agreements,” Ms O’Neill said.
Scarborough is on track to make its LNG shipments in the second half of next year, the offshore Mexico Trion field targeting first oil in 2028 and Louisiana LNG is eyeing a start-up in 2029.
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