LNG JAPAN has agreed to take a 10% participating stake in the multi-billion dollar offshore Scarborough gas project in Australia from Woodside Energy Group for $500m.

From the effective date of the transaction, which has been set as 1 January 2022, the Japanese company will compensate Woodside for its portion of expenses related to the Scarborough project.

Upon the completion of the transaction, the estimated overall amount for LNG JAPAN, covering the purchase price, reimbursed expenses, and any escalation, totals approximately $880m.

Conditional on the applicable Australian and Western Australian government approvals, the deal is expected to close in Q1 2024.

Upon closing, Woodside will retain a 90% stake in the Scarborough joint venture (JV) and continue to operate it. The Scarborough JV includes the Scarborough field along with its corresponding offshore and subsea infrastructure.

The gas field is situated approximately 375km off the Western Australian coastline.

According to Woodside, the Scarborough gas project entails setting up a floating production unit, featuring eight wells drilled during the initial phase and an additional thirteen wells drilled over the lifespan of the field.

The natural gas extracted from the Scarborough field will be conveyed through an underwater pipeline to the Pluto LNG facilities.

The final investment decision (FID) on the project was made in late 2021 and the first LNG cargo is planned for 2026.

Woodside and LNG Japan have also engaged in a non-binding heads of agreement for the procurement and sale of 12 LNG cargoes annually, equivalent to about 0.9 million tonnes per annum (mtpa) over a period of 10 years, starting in 2026.

LNG Japan CEO Kyo Onojima said: “We are very pleased to join the Scarborough Joint Venture and are looking forward to finalising the LNG offtake agreement and exploring business opportunities in the new energy sector.”

Woodside has also announced non-binding agreements with Sumitomo and Sojitz, both based in Japan, for exploring worldwide prospects in emerging energy sectors. These could include hydrogen, ammonia, carbon capture and storage (CCS), and carbon management technology.

Woodside CEO Meg O’Neill said: “The support of LNG Japan is testament to the quality of the Scarborough project. It also underscores the ongoing demand from Japanese buyers for new supplies of gas and the role of gas in supporting Japan’s energy security.”