In the lead up to the targeted final investment decision (FID) later this year, Woodside has finalised technical work to support execution readiness and completed an update of the capital expenditure requirements for the Scarborough development.

Refreshed pricing from major contractors underpins the updated cost estimate, and reflects Woodside’s work with them since 2020 to maximise the value of the project by optimising design and execution planning, and increasing offshore processing capacity.

The updated cost estimate is US$12.0 billion (100% project, nominal), comprising $5.7 billion for the offshore component and $6.3 billion for the onshore component.

The cost estimate is approximately 5% higher than the previous cost estimate announced in November 2019 and incorporates:

   - An approximately 3% cost increase in the onshore component, including modifications to Pluto Train 1 to enable processing of Scarborough gas
   - An approximately 8% increase in the offshore component, including an increase in offshore production capacity from 6.5 Mtpa to 8.0 Mtpa of LNG and an additional well.

The expected internal rate of return (IRR) of the integrated Scarborough and Pluto Train 2 development is greater than 12%. It has a globally competitive cost of supply of approximately $6.8/MMBtu to north Asia and is targeted to deliver the first cargo in 2026 into a market with anticipated robust demand for LNG.(1)

Woodside Acting CEO Meg O’Neill reaffirmed that the Scarborough development is a transformational project that will deliver enduring shareholder value.

“Significant progress has been made towards our targeted final investment decision on Scarborough and Pluto Train 2 this year.

“The cost update includes value-accretive scope changes to deliver an approximately 20% increase in offshore processing capacity and to modify Pluto Train 1 to allow increased Scarborough gas processing. It also reflects the work undertaken with our contractors to optimise the execution schedule and manage costs in preparation for FID.

“Woodside’s contracting strategy for Scarborough reduces cost risk, with approximately 90% of total project contractor spend structured as lump-sum and fixed rate agreements.

“We have commenced the formal processes for selling down our interest in Pluto Train 2 and Scarborough as we target the investment decision later this year and these processes are supported by the updated cost estimate,” she said.

(1) Cost of supply based on integrated LNG DES North Asia. At 10% discount rate.

About Woodside

Woodside (ASX: WPL, OTC: WOPEY) is Australia’s largest independent oil and gas company, with a proud history of safe and reliable operations spanning decades.
As the largest operator of oil and gas in Australia, Woodside produces around 900,000 barrels of oil equivalent each day from a portfolio of facilities which we operate on behalf of some of the world’s major oil and gas companies.