Woodside posts strong dividend and confirms shutdown plan for Karratha LNG train

Woodside Energy plans to shut down a train at the Karratha Gas Plant within months as the company struggles to lock in new supply.

The huge North West Shelf Venture export hub has been run by the Perth business for four decades but one of five LNG processing trains will be turned off before mid-2025, markets were told on Tuesday.

The existing reserves at North West Shelf are depleting as they age, and the ASX20 company needs replacement gas to keep the trains running at full capacity.

A proposal to extend the Karratha plant’s life until 2070 has been held up in green tape for more than two years, as revealed by The West Australian in July.

Woodside chief executive Meg O’Neill said the company had been in talks with numerous potential partners to feed gas into Karratha.

The best fit would be the Browse development, she said.

That project is under serious scrutiny by the Environmental Protection Authority and may be knocked back, while Browse’s owners and NWSV have long struggled to align on a deal.

The Venture already plans to sell gas from the Waitsia field using a swap contract with Mitsui & Co and Beach Energy (which shares a major shareholder with The West Australian’s publisher Seven West Media, Seven Group Holdings).

Another option would be Mineral Resources’ Lockyer field, although Perth Basin gas is banned from export under existing domestic reservation rules.

Ms O’Neill told The West Australian the economic impact of closing the first train would be minimal. But that could grow if further trains at the Shelf are closed over time, she said.

Just down the road, Woodside is building a new LNG Train at Pluto, where it is the controlling owner.

When asked why the company would build a new train while shutting another down, Ms O’Neill said the gas composition was significantly different.

But she said Pluto would provide plenty of long term operational jobs in the Karratha community.

Woodside has also parked two major hydrogen projects, H2Tas in Tasmania and Southern Green Hydrogen in New Zealand.

Ms O’Neill said Tasmania’s energy market had substantial uncertainty about the pipeline for renewables.

Woodside’s clean energy strategy will instead focus on the Beaumont Clean Ammonia Project in Texas, which will be acquired in a $3.6 billion deal announced earlier this month.

The company’s shares lifted 4 per cent to $27.46 after announcing a stronger than expected interim dividend of US69 cents.

Analysts from investment bank UBS expected “the stock to trade favourably on the strong interim dividend”.

Underlying profit fell 14 per cent to $US1.6 billion ($2.4bn) while falling gas prices slowed operating revenue by 19 per cent to $US6bn.

Ms O’Neill said oil prices were stable and international gas prices remained reasonably strong.

There was “a lot of thirst for LNG” from Asian customers, she said.