Woodside has entered into a sale and purchase agreement with Global Infrastructure Partners (GIP) for the sale of a 49 per cent non-operating participating interest in the Pluto Train 2 Joint Venture.
Pluto Train 2 is a key component of the proposed Scarborough development and includes a new LNG train and domestic gas facilities to be constructed at the existing Pluto LNG onshore facility. The estimated capital expenditure for the development from the effective date is US$5.6 billion.
In addition to its 49 per cent share of capital expenditure, the joint venture arrangements require GIP to fund an additional amount of construction capital expenditure of approximately US$835 million. Woodside’s joint venture capital contributions will be reduced accordingly. GIP’s final capital contribution is dependent on interest rate swap and foreign exchange rates on the date of the final investment decisions for Scarborough and Pluto Train 2.
If the total capital expenditure incurred is less than US$5.6 billion, GIP will pay Woodside an additional amount equal to 49 per cent of the under-spend. In the event of a cost overrun, Woodside will fund up to US$835 million in respect of a 49 per cent share of any overrun. Delays to the expected start-up of production will result in payments by Woodside to GIP in certain circumstances.
The development of Pluto Train 2 is expected to be supported by a long-term processing and services agreement (PSA) to be entered into between the joint ventures.
The transaction includes a number of other related agreements between Woodside and GIP including a project commitment agreement (PCA). The PCA includes provisions for GIP to be compensated for exposure to additional Scope 1 emissions liabilities above agreed baselines, and to sell its 49 per cent interest back to Woodside if the status of key regulatory approvals materially changes.
Completion of the transaction is subject to conditions precedent including final investment decisions for the Pluto Train 2 and Scarborough developments, Foreign Investment Review Board approval, execution of the Scarborough PSA and relevant government and regulatory approvals.
Following completion Woodside will hold a 51 per cent participating interest in the Pluto Train 2 Joint Venture and remain as operator. The effective date of the Transaction is 1 October 2021 and completion is expected to occur in January 2022.
Woodside CEO Meg O’Neill said GIP’s investment will help fund the expansion of the Pluto LNG facility, which will assist customers to achieve their decarbonisation goals through the energy transition.
“The sale of the interest in Pluto Train 2 is a significant milestone as we progress towards a final investment decision on our Scarborough development, further de-risking this globally competitive investment.
