JERA to Enter Agreement with Woodside to Acquire Participation Interest in Scarborough Gas Field to Secure Stable LNG Supply and Sign LNG Sales and Purchase Heads of Agreement with Woodside

Source Company Press Release
Company JERA Co., Inc., Woodside Energy Group Ltd
Tags Country: Australia, M&A: Asset Deal, Deals, Upstream: Upstream News
Date February 23, 2024

JERA Co., Inc. (“JERA”) announced today it entered into a sale and purchase agreement with  Woodside Energy Group Ltd ("Woodside"), a major Australian energy company, to acquire a 15.1% participating interest in the Scarborough gas field development project (the "Project"). The total consideration of the acquisition of the Project is estimated to be approximately US$ 1.4 billion, which comprises the purchase price and reimbursement to Woodside for JERA’s share of expenditure incurred up to completion. Completion of the transaction is subject to conditions, including obtaining permits and approvals.

The Scarborough gas field is located off the northwest coast of Western Australia in Commonwealth waters. Natural gas produced from the Scarborough field will be transported via a subsea pipeline to the Pluto LNG facilities for the production of LNG. The composition of the Scarborough gas is very low in CO2, at less than 0.1%.

The annual LNG production expected from the Project is approximately 8 million tonnes per annum (“Mtpa”) at its peak rate. JERA will off-take an equity share of approximately 1.2 Mtpa of LNG cargoes. The final investment decision for the Project was made in November 2021, and the first cargo is targeted for 2026.

As part of the broader strategic relationship, JERA also entered into a non-binding heads of agreement (HOA) with Woodside, for the sale and purchase of LNG from its portfolio. Under the agreement, JERA intends to purchase 6 cargoes (approximately 0.4 Mtpa) of LNG from Woodside for 10 years from 2026 onwards.

In addition, JERA signed a non-binding memorandum of understanding (MOU) with Woodside to explore collaboration in decarbonization initiatives. Moving forward, JERA will be evaluating potential collaboration with Woodside in areas such as ammonia, hydrogen, and Carbon Capture and Storage (CCS).

In Asia, there is a strong need to balance the stable supply of energy to support economic growth with decarbonization. Gas-fired power generation, which has lower CO2 emissions than other fossil fuel-based power generation, has a complementary relationship with renewable energy, which has an unstable power output. It is also an indispensable energy source for promoting energy transition. As energy demand is expected to grow, the importance of securing a stable supply of competitive LNG increases, and LNG produced from Australia, located close to Asia, including Japan, is expected to play an important role.

JERA will contribute to solving the world’s energy issues through achieving sustainability for a cleaner world, affordability for lower prices, and stability of supply simultaneously. This will be accomplished by utilizing the company’s extensive experience in the LNG value chain business, which has been cultivated over many years.

Yukio Kani, JERA Global CEO and Chair said, “Solving the world's energy issues requires deep collaboration to tackle challenges one by one with reliable partners. I am grateful for the open and engaging dialogue I have had with Woodside CEO Meg O’Neill. I look forward to further developing our relationship with Woodside, a global player in LNG, and to promoting new initiatives to achieve decarbonization.”

Woodside CEO Meg O’Neill welcomed Japan’s largest utility, JERA, into the Scarborough Joint Venture.

“JERA’s participation is a further demonstration of the importance of Scarborough to Japanese customers and confidence in long-term demand.

“Scarborough is a world-class project which will provide reliable energy for customers in the Asian region, including in Japan. LNG continues to be an important energy source for Japan and one which supports the country’s decarbonisation ambitions,” she said.

Outline of equity sale and purchase agreement

Seller  Woodside Energy (Australia) Pty Ltd 
Buyer  JERA Scarborough Pty Ltd 
Interests acquired  Equity of Scarborough gas field – 15.1% *LNG: Up to 1.2 Mtpa 

Outline of non-binding HOA for sale and purchase of LNG

Seller  Woodside Energy Trading Singapore Pte Ltd 
Buyer  JERA 
Term  April 2026 to March 2036 (10 years) 
Contract quantity  6 Cargoes (Approx. 0.4 Mtpa) 
International commercial terms  Delivered Ex Ship (DES) 

Outline of non-binding MOU on collaboration in decarbonization initiatives

Contract party  Woodside Energy Technologies Pty Ltd 
JERA 
Scope of business  ・Production, supply, and procurement of low carbon ammonia ・Hydrogen and liquefied hydrogen business ・Decarbonization business including CCS  
Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd