No recipe for value: Woodside’s FID on Louisiana LNG

The Australasian Centre for Corporate Responsibility (ACCR) is commenting on Woodside Energy Group Ltd’s announcement that it has made a Financial Investment Decision (FID) to develop the US$17.5 billion Louisiana LNG project.

ACCR analysis, drawing on Rystad data, shows capex intensity for the project is higher than 70% of US LNG facilities.^[1]

This decision is expected to increase Woodside’s Scope 3 emissions by 27%.^[2]

Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“Louisiana LNG is yet another high-cost, high-emissions investment from a company that has delivered less than 1% total shareholder return (TSR) over 15 years and consistently underperformed its peers. Doubling down on the same strategy does not seem like a solution to Woodside’s chronic underperformance problem.

“Rather than focusing on generating strong returns for shareholders, Woodside appears determined to build an LNG empire, regardless of the risks.

“Adding incremental LNG supply into an already oversupplied commodity market is unlikely to deliver strong shareholder returns. The International Energy Agency and Bloomberg are both projecting an LNG glut later in the decade.

“The Louisiana LNG project only exceeds Woodside’s hurdle rate by 1%, which does not seem compelling considering the host of risks this project brings and its reliance on a cross subsidy from trading revenue.

“Even if the promised sell down happens, Woodside will still retain a stake in an underwhelming project that is high up on the cost curve.

“At a time when major proxy advisor Glass Lewis is recommending shareholders vote against a Woodside director at next week’s AGM, based in part on persistent strategic underperformance, this decision further demonstrates the Board’s unwillingness – or inability – to change course.

“For investors who have repeatedly signaled dissatisfaction with Woodside’s strategy, today’s announcement is yet another alarming sign that this Board is not managing climate risk effectively.”