Woodside has signed a binding sale and purchase agreement to sell a 15.1% stake in the Scarborough gas project offshore WA to Japan’s JERA for an estimated $1.4bn (Y210.9bn).

The transaction amount includes a purchase price of approximately $740m and reimbursement to Woodside for JERA’s share of expenditure since 1 January 2022.

The deal is scheduled for completion in the second half of 2024.

In addition to the stake sale, Woodside has entered a non-binding heads of agreement with JERA for the sale of six liquefied natural gas (LNG) cargoes on a delivered ex-ship basis annually over ten years, starting in 2026. These cargoes will be sourced from Woodside’s global portfolio.

JERA Global CEO and chair Yukio Kani 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 decarbonisation.”

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The two companies have also expressed a mutual interest in new energy collaboration, signing a non-binding agreement to explore opportunities in ammonia, hydrogen, carbon management technology and carbon capture and storage. These efforts align with both organisations’ decarbonisation goals.

The Scarborough gas field, situated off the north-west coast of WA, is known for its low CO₂ content, under 0.1%.

The field’s gas will be processed at the Pluto LNG facilities, with an expected peak LNG production of around eight million tonnes per annum (mtpa). JERA’s equity share will amount to roughly 1.2mtpa of LNG cargoes annually.

The final investment decision for the Scarborough project was made in November 2021, with the first cargo delivery anticipated for 2026.

Woodside CEO Meg O’Neill said: “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.”

Recently, Woodside Energy terminated discussions with Santos regarding a potential merger that would have formed an oil and gas powerhouse worth approximately A$80bn ($52bn).