Europe’s former biggest buyer of Russian gas, German utility Uniper, is buying more LNG from Woodside Energy to move further away from the vagaries of President Putin’s resources ‘diplomacy’.
Uniper has added up to 800,000 tonnes of LNG purchases from Woodside through its Singapore trading hub, on top of the one million (soon to rise to 2 million) already contracted for.
The LNG won’t necessarily all come from Australia, though. Woodside will source it from its international trading operations.
The long distance between Australia and Europe means the LNG is set to come from the Australian company’s growing trading portfolio in the US rather than its own export projects in Western Australia.
Some of the gas for Uniper under the various deals could come from the US where Woodside on Monday signed two contracts for the supply of up to 2.5 million tonnes a year.
Woodside said it signed two binding agreements with US-based Commonwealth LNG to buy liquefied natural gas (LNG) from the latter’s liquefaction plant in Louisiana.
The deal follows both companies starting talks in January and comes at a time when demand for energy in Europe is heightened due to the conflict in Ukraine.
“The agreements secure for Woodside low-cost LNG volumes in the Atlantic Basin in a period of expected strong demand as Europe seeks alternatives to Russian pipeline gas,” Woodside CEO Meg O’Neill said in Monday’s statement.
Under the agreement, Woodside will purchase up to 2.5 million tonnes a year of LNG over 20 years from Commonwealth LNG’s proposed export facility in Cameron Parish, Louisiana, with the first deliveries expected to commence in mid-2026.
Tuesday’s announcement with Uniper said the new deal was “a flexible long-term sale and purchase agreement (SPA)” with Uniper Global Commodities for Woodside to supply LNG from its global portfolio into Europe, including Germany, for a term up to 2039, commencing in January 2023.
The quantity of LNG to be supplied under the new SPA is up to twelve cargoes a year (equivalent to more than 0.8 million tonnes per annum or one billion cubic meters of natural gas).
“Supply from September 2031 is conditional upon Uniper finalising its long-term strategic capacity bookings in Northwest Europe, expected by March 2023.”
Uniper and Woodside had earlier doubled an existing 13-year deal from 2021 to one million tonnes of LNG. It is due to further increase to two million a year from 2026 when the new gas from the US starts kicking in.
Despite this positive news, Woodside shares ended steady at $35.08 after touching a day’s high of $35.69.
