Australia’s Woodside Petroleum will exit its 50% non-operated participating interest in the proposed Kitimat LNG project in British Columbia, Canada
The exit will include the divestment or wind-up and restoration of assets, leases and agreements covering the 480-km Pacific Trail Pipeline route and the site for the proposed LNG facility at Bish Cove. The company will work with the project operator Chevron to protect value during the exit.
Costs associated with the decision to exit the project are expected to impact 2021 net profit after tax by approximately US$40M–$60M.
In December 2019, Chevron announced its plan to divest its 50% share of Kitimat LNG but has yet to find a buyer. In March this year, the energy giant said it was halting all spending on the project following its unsuccessful divestment process.
Woodside’s acting chief executive Meg O’Neill said the company’s decision comes after Chevron’s divestment plans adding that the company will now focus on the delivery of higher value opportunities in Australia and Senegal.
“Following Chevron’s decision to exit Kitimat LNG and subsequent decision in March 2021 to cease funding further feasibility work, Woodside undertook a comprehensive review of our options for the project and our wider development portfolio. The Kitimat LNG proposal was designed to develop a new source of LNG to supply Asian markets in the latter part of this decade. However, we have decided to prioritise the allocation of capital to opportunities that will deliver nearer-term shareholder value.
“Woodside is focused on working towards the targeted final investment decision for the Scarborough LNG development in Western Australia in the second half of 2021 and the continued successful execution of our Sangomar oil project offshore Senegal.”
Woodside will however retain a position in Canada’s Liard Basin upstream gas resource which the company hopes will provide a low-cost option to investigate potential future natural gas, ammonia and hydrogen opportunities in British Columbia.
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