Woodside Energy Approves $17.5 Billion Louisiana LNG Development

Story by David Winning msn.com

SYDNEY—Woodside Energy approved the $17.5 billion development of the Louisiana LNG project, betting on strong ongoing demand for traditional fuels and the U.S. as a key supplier of natural gas to the global market.

Woodside, which acquired the Louisiana LNG project through the $900 million takeover of Tellurian last year, said it expects to produce liquefied natural gas for the first time in 2029.

“The project benefits from access to abundant low-cost gas resources in the United States and boasts an asset lifespan of more than 40 years,” said Chief Executive Meg O’Neill.

Woodside plans to develop Louisiana LNG in stages. The first phase involves construction of three units able to produce up to 16.5 million metric tons of LNG annually, although Woodside holds permits to produce as much as 27.6 million tons of LNG per year.

Woodside’s decision to proceed with developing Louisiana LNG comes despite uncertainty created in U.S. energy policy under President Trump. Earlier this month, Woodside said it is assessing the impact of recent U.S. tariff action and the potential for more policy shifts that could affect the project.

Louisiana LNG is within a so-called Foreign-Trade Zone that enables the project to defer the payment of tariffs until the completion of each gas processing unit. Still, around 25% of construction costs is equipment and materials. Woodside expects around half of those materials to come from the U.S.

With the White House having placed tariffs on imports of steel and aluminum, analysts at Goldman Sachs in the run up to Tuesday’s announcement concluded the project’s costs could rise by some $500 million relative to earlier forecasts.

Woodside moved to ease concerns around costs on Tuesday. It estimates the Louisiana LNG development will deliver an internal rate of return above 13%. The project’s first phase could generate around $2 billion of net operating cash annually in the decade starting 2030, Woodside said.

To reduce the burden on its balance sheet, Woodside this month agreed to sell a 40% interest in the entity that owns infrastructure supporting Louisiana LNG to Stonepeak for $5.7 billion. Woodside said that contribution would come early, supporting 75% of capital expenditure in 2025 and 2026.

Woodside continues to discuss the sale of more equity in the project that would reduce its capital commitments still further. Without new deals, Woodside would need to invest some $11.8 billion.

“We are pleased with the strong level of interest from potential strategic partners and are advancing discussions targeting further equity sell-downs,” O’Neill said.

Louisiana LNG is part of a pipeline of projects that Woodside owns as it seeks to play a bigger role in supplying global natural-gas markets. These developments include the Scarborough gas project in Australia, which is 82% complete and on track for its first LNG cargo in the second half of 2026.

Woodside said on Tuesday that it would operate more than 5% of global LNG supply once the Louisiana LNG project starts up, citing data from consultancy Wood Mackenzie.