Japanese LNG importer Jera has decided to invest $1.4bn in the Scarborough gas project being developed by Australian independent Woodside Energy off the northwest coast of Western Australia, in a deal that will give it up to 1.2mn t/yr of LNG.
Jera on 23 February agreed with Woodside Energy through its subsidiary Jera Australia to acquire a 15.1pc stake in the Scarborough gas field. The $1.4bn is Jera's biggest investment in any gas field by monetary value. The transaction is likely to be completed in the latter half of 2024, subject to conditions including obtaining permits and approvals.
The Scarborough gas project aims to produce 8mn t/yr of LNG at Woodside's 4.9mn t/yr Pluto LNG facility from 2026, where it is building a second 5mn t/yr train 2 facility. Jera plans to secure LNG for around 20 years on an fob basis, basically for its own use. It could consider chartering a new LNG vessel in the future, while leveraging its existing fleet, the company said.
Jera has decided to get involved in the Scarborough gas development, as the project is in relatively close proximity to Japan and has already passed its final investment decision in November 2021. The percentage of CO2 in gas in the field is at less than 0.1pc, which has also encouraged the company to invest. Jera will not consider installing carbon capture and storage (CCS) technology in the project. It could purchase carbon credits, if CO2 emissions rise above the baseline set for the project.
Jera also agreed on 23 February to buy six LNG cargoes per year (around 400,000 t/yr) from Woodside's portfolio over 10 years beginning in April 2026. The deal is on a des basis, with the price formula undisclosed.
Combined LNG quantities in the last two deals account for around 4.6pc of Jera's current LNG handling volumes of 35mn t/yr. It is unclear whether handling quantities would increase in the future, which is dependent on demand, Jera said. But the company sees LNG playing a vital role in Asia to balance stable energy supply, to support economic growth with decarbonisation and back up unstable renewable power output.
Jera looked for a new LNG supply source, while the US in late January decided to temporarily pause new licences for gas export. Jera said it is monitoring the US situation, without clearly adding that this has influenced its recent investment decisions.
Jera and Woodside also agreed on 23 February to explore collaboration in areas such as ammonia, hydrogen and CCS. More details such as timelines for discussion are yet undisclosed.
