By Reuters 2015-06-06 21:06:05
Australia’s Woodside Petroleum is expanding its LNG business and aims to build a global supply network ahead of an expected surge in trading of the fuel, its chief executive said in an interview.
Peter Coleman said Woodside’s latest venture with U.S.-based Sempra, announced on Wednesday, to potentially build from scratch an LNG export plant in the United States at Port Arthur was the latest signal of its intention.
“What our strategy is: focus on Asia customers, but sourcing LNG globally,” and not just from the company’s existing Australian producing plants, he said on the sidelines of an industry conference in Paris.
Sources close to the matter say the strategy could take advantage of any disruption at BG Group, a heavyweight in LNG trading which analysts think could lose some of its flexibility following its takeover by oil giant Shell.
“We see an opportunity in the marketplace at the moment for a company like Woodside to differentiate,” Coleman said.
The world’s biggest LNG buyers in Asia have shown a strong appetite for United States-sourced supply due to its linkage to domestic Henry Hub gas prices, some of the world’s cheapest.
A shale gas-drilling boom brought U.S. futures prices down to decade-low levels, providing a cheap feedstock for LNG export plants. In contrast, LNG supply sourced from Australia is linked to a more expensive basket of crude oil grades.
“For us we see a real opportunity in the marketplace where Woodside can position itself, we want to be seller of choice to our buyers, but to do that we need to offer options,” Coleman said.
The Sempra deal follows Woodside’s agreement to buy LNG supply from Cheniere’s planned Corpus Christi export plant on the U.S. Gulf Coast. Last year, it also paid $3.7 billion to buy stakes in Canada’s Kitimat LNG and Australia’s Wheatstone projects.
“The Port Arthur deal (with Sempra) extends the Corpus arrangement where we are a buyer, to actually one step upstream where together we can add our value as Woodside,” Coleman said.
“What that does is it allows us to bring to our customer optionality with respect to the LNG’s pricing point, and also its geography and distance from markets.”