Australia-based oil and gas company Woodside has signed a 15-year liquefied natural gas (LNG) sales and purchase agreement (SPA) with China Resources Gas International.
The SPA is for the supply of 0.6 million tonnes of LNG per year starting from 2027 and marks Woodside’s fourth long-term LNG agreement for an Asia-based customer in the last 15 months.
Mark Abbotsford, Executive Vice-President & Chief Commercial Officer, said it also marked the first time Woodside has signed a long-term SPA on a standalone basis with a Chinese customer.
“The agreement again demonstrates the depth and length of demand for LNG in Asian markets as nations in the region seek to guarantee energy supplies,” he said.
Yang Ping, China Resources Gas Group Chairman, said the signing would grow the potential for future cooperation between the two countries.
Earlier this month Woodside and energy technology company Baker Hughes announced a joint initiative to develop lower carbon power generation technology using the Net Power platform which is specifically designed for oil and gas (including LNG), heavy industries and other small-scale applications.
The platform uses natural gas to generate power while capturing “nearly all” carbon dioxide emissions.
Separately Woodside is pressing ahead with the Gippsland Basin in Victoria, a 50:50 joint venture with Esso Australia (a subsidiary of ExxonMobil Australia and New Zealand, in south-east Australia), with the project reaching final investment decision, according to Reuters. The basin is located in one of Australia’s most prolific hydrocarbon regions.
Liz Westcott, Executive Vice-President and Chief Operating Officer, said that when the AU$350m Turrum Phase 3 project comes online it should supply four times more gas than Queensland supplied to southern states last year. Together with the recently approved Kipper 1B project, it will unlock additional gas that is needed to avoid future shortfalls.
Despite building a position as one of the largest LNG exporters, oil and gas exploration activities in Australia have fallen significantly over the last two decades.
Offshore exploration in particular has taken a big hit, with the number of new wells falling from over 50 in 2010 to just three in 2023, according to analyst group Wood Mackenzie. The lack of new discovered volumes will have major implications for the pipeline of new supply projects, in terms of their quality and capacity to backfill LNG and domestic natural gas facilities. CCUS projects have so far lacked the level of financial support or incentives seen in Europe and North America.
Western Australia gas consumption grows apace
While the rest of Australia weans itself off gas, Western Australia (WA)’s consumption grows apace, led by just four industrial sectors. However, a new report finds that new technologies and access to abundant renewable energy could slash the state’s gas use and deliver benefits for industry.
WA is the only state or territory to increase gas use since FY2020, accounting for almost half of Australia’s total consumption, according to a briefing note, Reining in Western Australia’s gas addiction, from the Institute of Energy Economics and Financial Analysis (IEEFA). The vast majority (84%) of WA’s gas demand is concentrated in liquefied natural gas (LNG) processing (36%), electricity generation (24%), alumina refining (17%) and ammonia production (7%).
In the coming decade, WA’s gas consumption is expected to grow further with a large number of gas, metals and minerals projects in the pipeline. The state’s demand (excluding LNG processing) is forecast to be 19% higher by 2034 by the Australian Energy Market Operator (AEMO), but the growth could be even more.
Source: IEEFA
