Woodside exits Kitimat LNG project in Canada

Australian major Woodside has decided to exit its 50 per cent non-operated participating interest in the proposed Kitimat LNG development, located in British Columbia, Canada.

The exit will include the divestment or wind-up and restoration of assets, leases and agreements covering the 480 km Pacific Trail Pipeline route and the site for the proposed LNG facility at Bish Cove.

Woodside said in its statement on Tuesday it will retain a position in the Liard Basin upstream gas resource.

Woodside will work with Kitimat joint venture participant and operator Chevron to protect value during the exit.

Chevron unveiled its plan to divest its 50 per cent interest in Kitimat LNG in December 2019.

The costs associated with the decision to exit Kitimat LNG are expected to impact 2021 net profit after tax (NPAT) by approximately $40 – 60 million. These costs will be excluded from underlying NPAT for the purposes of calculating the dividend.

Woodside acting CEO Meg O’Neill said exiting Kitimat LNG will allow Woodside to focus on the successful delivery of higher value opportunities in Australia and Senegal.

“Following Chevron’s decision to exit KLNG and subsequent decision in March 2021 to cease funding further feasibility work, Woodside undertook a comprehensive review of our options for the project and our wider development portfolio.

“The Kitimat LNG proposal was designed to develop a new source of LNG to supply Asian markets in the latter part of this decade. However, we have decided to prioritise the allocation of capital to opportunities that will deliver nearer-term shareholder value,” O’Neill said.

Woodside is focused on working towards the targeted final investment decision for the Scarborough LNG development in Western Australia in the second half of 2021 and the continued successful execution of its
Sangomar oil project offshore Senegal.

“Retaining an upstream position in the prolific Liard Basin provides Woodside a low-cost option to investigate potential future natural gas, ammonia and hydrogen opportunities in British Columbia,” she said.