Woodside's US LNG Project Faces Sales Headwinds on Price

Project Sales Lag Due to Pricing Strategy

Australia's Woodside Energy is reportedly encountering difficulties in securing long-term buyers for its Louisiana LNG export facility. The primary issue stems from its proposed liquefaction fees, which sources indicate are higher than prevailing U.S. market rates.

Market Rate Discrepancy

According to reports, Woodside initially sought liquefaction fees above $2.80 per million British thermal units mmBtu. This compares to a broader market rate of approximately $2.40 to $2.50 per mmBtu. Although the company has reportedly lowered its asking price to around $2.60 per mmBtu, this remains at the high end of the market, level with major producer Cheniere Energy.

Impact on Project Outlook

To date, Woodside has only announced one major sales agreement with Germany’s Uniper, accounting for about 25% of its share of the plant's output. Despite reports of pricing challenges, Woodside's management has stated that customer interest remains strong and they are comfortable with the project's progress.

Conclusion

The resistance to Woodside's pricing could indicate a potential ceiling on what buyers are willing to pay for U.S. LNG, making future contract negotiations a critical factor for the project's success.

FAQ

Q: Why is Woodside struggling to sell its Louisiana LNG?
A: Its proposed liquefaction fees are reportedly higher than the current U.S. market average, making it less competitive.

Q: What is Woodside's current liquefaction fee offer?
A: Sources suggest Woodside is now offering fees around $2.60 per mmBtu, down from an initial asking price above $2.80.

Source: Reuters via Investing.com