Trion approval more a millstone than a milestone

The Australasian Centre for Corporate Responsibility​ (ACCR)  is commenting on Woodside Energy Group’s announcement that the Trion deepwater project in the Gulf of Mexico has received regulatory approval from the Mexican regulator, Comisión Nacional de Hidrocarburos.

In March, ACCR built an emissions and cash flow forecast of Trion and found that weak economics, high emissions and significant downside risk means Woodside does not have a strong case to support a positive FID on Trion.

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

“Woodside investors are again drawing the short straw. Our analysis shows Trion is a low-margin project, with a constellation of risks, several of which are new to Woodside’s portfolio.

“This capital expansion is not the best use of investor’s funds.

“Woodside’s Trion plan is based on risky assumptions that will undoubtedly leave investors uneasy. Of particular note is Woodside’s bullish assumed oil price that is well above the June 2028 futures price and its low hurdle rates. Woodside is willing to accept lower profits, even after assuming more revenue than peers would.

“Sangomar, the other big oil project Woodside is building at the moment, is now 12 months late and 18% over budget compared to initial guidance provided at Final Investment Decision. The crystal ball would say that Trion could follow this path too.

“Pemex, the joint venture partner in Trion, is in desperate financial straits, and was recently downgraded by Moody’s and Fitch, meaning it is now rated as the worst oil company in Latin America. It is not a partner of choice and adds further risk to a project with already-weak economics.

“This is not a milestone for Woodside investors, but more like a millstone.”