$5.7B investment to fast-track Woodside’s US LNG development

Australia’s energy giant Woodside Energy has entered into a binding agreement with Stonepeak, a New York-based investment firm specializing in infrastructure and real assets, for the sale of an interest in its liquefied natural gas (LNG) development on the United States’ Gulf Coast.

Woodside expects the sale of a 40% interest in Louisiana LNG to significantly reduce its capital expenditure profile, thanks to Stonepeak providing $5.7 billion, or 75% of project capital expenditure, for foundation development of Louisiana LNG on an accelerated basis in 2025 and 2026. The remainder is expected to follow in subsequent years. 

Woodside CEO, Meg O’Neill, noted: “We are very pleased to have Stonepeak join us in Louisiana LNG, given their demonstrated track record investing in US gas and LNG infrastructure across LNG facilities, LNG carriers, and floating storage and regasification units. This transaction further confirms Louisiana LNG’s position as a globally attractive investment set to deliver long-term value to our shareholders. It is the result of a highly competitive process that attracted leading global counterparties and significantly reduces Woodside’s capital expenditure for this world-class project.

“The accelerated capital contribution from Stonepeak further enhances Louisiana LNG returns and strengthens Woodside’s near-term capacity for shareholder distributions. Our partnership with Stonepeak, together with our lump sum turnkey EPC agreement with Bechtel, and existing regulatory permits, give us confidence to progress at pace towards a final investment decision on Louisiana LNG.”

As for the ownership structure following the transaction, Stonepeak will hold 40% in Louisiana LNG Infrastructure (InfraCo), with the remaining 60% of InfraCo owned by Louisiana LNG (HoldCo), the holding company operated by Woodside. Subject to a final investment decision (FID) for the Louisiana LNG foundation development, InfraCo will own and construct the liquefaction infrastructure and the common user facilities, while HoldCo will be responsible for gas supply and LNG offtake.

The Australian player describes this as a material step towards readiness for an FID. The investment in InfraCo is said to be supported by a long-term liquefaction tolling agreement between InfraCo and HoldCo with what Woodside says are competitive tolling fee terms.

The transaction, which is effective from January 1, 2025, is expected to close in Q2 2025, subject to conditions precedent including FID and the necessary regulatory, legal, and other customary approvals. A payment of approximately $2 billion is anticipated following completion for Stonepeak’s share of capex funding incurred since the effective date.

According to Woodside, the estimated forward cost for the foundation development of the LNG project from December 2024 remains $900–960/tonne. This includes EPC costs, contractor completion incentive payments, owner’s costs, allowances, and contingency. It excludes pipeline cost and HoldCo costs, and contingency.

Formerly known as Driftwood LNG, the Louisiana LNG project is positioned in what Stonepeak calls the heart of the Gulf Coast LNG corridor, close to natural gas resources and with direct access to the U.S. Gulf. The project’s total permitted capacity is 27.6 million tonnes per annum (mtpa), entailing an 11 million-mtpa Phase 1 and 5.5 mtpa Phase 2. Three additional plants, for a total of five, are planned through four phases. 

The construction of the foundation development is currently underway, and the front-end engineering design (FEED) has been completed, with the FID said to be near. Bechtel is in charge of the engineering, procurement, and construction (EPC) portion of the project. The U.S. player inked a revised contract with Woodside in December 2024, with Baker Hughes winning a deal to supply gas technology equipment later that month.

“With the need to bring significant additional capacity online over the coming years, we have strong conviction in the critical role Louisiana LNG will play in the US LNG export market,” said James Wyper, Senior Managing Director and Head of U.S. Private Equity at Stonepeak. “The Project represents a compelling opportunity to invest in a newbuild LNG export facility nearing FID approval with an attractive risk-return profile and best-in-class partners in both Bechtel and Woodside to construct and operate the asset.”

According to Woodside, the transaction will also enhance the cash flow profile ahead of revenues from its Scarborough energy project in Australia, which is expected to deliver its first LNG in 2026. In December 2024, the project saw the arrival of the last batch of modules at the Pluto Train 2 site. 

“We are pleased with the strong level of interest from counterparties and customers in Louisiana LNG. We will continue advancing discussions with additional potential partners targeting an equity sell-down of around 50% in the integrated project. As we have demonstrated with our Scarborough and Pluto Train 2 Project in Australia, the addition of an infrastructure partner unlocks value and paves the way for other strategic equity partners,” added O’Neill.

After the announcement in July 2024, Woodside formally came on board the Louisiana LNG project in October 2024, purchasing all issued and outstanding common stock of Tellurian for approximately $900 million in cash.