Woodside Energy has entered into an agreement to sell a 15.1% share in its Scarborough project to JERA, a Japanese LNG buyer, for approximately $1.4 billion. This marks Woodside's second stake sale to a Japanese LNG buyer within six months. The deal includes a purchase price of around $740 million, along with reimbursement to Woodside for JERA's portion of expenses incurred from January 1, 2022, the effective date of the transaction, as stated by Woodside.
During a conference, Yuichiro Kato, executive officer of JERA, stated that the acquisition of a stake in Scarborough represents JERA's largest overseas investment in LNG. JERA, Japan's largest power generator, intends to finance the acquisition through a blend of equity capital and debt. Woodside had previously disclosed a sale of a 10% participating interest in Scarborough to LNG Japan for $500 million in August 2023.
Despite making gradual reductions in fuel imports over the last decade due to the restart of nuclear power plants and increased adoption of renewable energy, resource-limited Japan remains the world's second-largest importer of LNG after China. LNG continues to account for a significant portion, approximately one-third, of Japan's electricity mix. Japanese corporations have been broadening their LNG supply sources through overseas acquisitions. In December, Tokyo Gas, Japan's largest city gas supplier, acquired Texas-based natural gas producer Rockcliff Energy for $2.7 billion.
Woodside stated in a press release that the sale of the stake to JERA was anticipated to be finalized in the latter half of 2024. Assuming both stake sales are successful, Woodside will retain a 74.9% stake in the $12 billion Scarborough gas project and remain its operator. The project remains focused on achieving its goal of delivering its initial LNG shipment in 2026.
"JERA's participation in the Scarborough joint venture, which will also include LNG Japan, is a further demonstration of the importance of the project to Japanese customers and confidence in long-term demand", Woodside CEO Meg O'Neill said in the statement. "We are also looking forward to exploring new energy and business opportunities alongside JERA". Woodside additionally engaged in a non-binding agreement with JERA to provide six LNG shipments annually from its worldwide portfolio on a delivered ex-ship basis for ten years beginning in 2026.