Woodside Energy - Another LNG Play (NYSE: WDS)
This week’s single-name stock report will cover Woodside Energy (NYSE: WDS), an Australia-based energy company with a focus across three pillars: offshore oil & gas production, LNG export, and new energy. Woodside Energy has a 35-year history of pioneering LNG exportation in Australia and through their merger with BHP Petroleum (BHPP) has become a global top 10 independent energy company by production.
In Tuesday’s edition to ThePeachPit, I discussed some of the risks posed by the pause on new LNG export capacity in the US. Since the news broke that no new export terminals will be approved for the time being, there have been some interesting updates in the global market. Qatar announced their planned 85% expansion of LNG production by 2030, increasing capacity from 126MTPA to 142MTPA. This will give Qatar a 25% share of the global capacity and significant strength over the offtake demand in the instance of a gas capacity scare as seen across the European Bloc in 2022.
There are significant risks and geopolitical implications that are in play as the US pauses further export capacity approvals. One that comes to mind is stability in expectations. Natural gas is more or less an independent market outside of oil and the US isn’t the only player in town. LNG offtake capacity is also sold on long-term, 20+ year contracts, locking in suppliers and receivers for an extended period of time. This is very much a first movers’ game, and if domestic producers and exporters cannot get their footing before everyone else, the domestic gas market can kiss any potential upswing goodbye. Though it’s hard to see as a user of natural gas to heat one’s home, low gas prices WILL make the domestic economy worse off in the long run, whether its through industry consolidation or bankruptcy; the industry has a way of grasping control over the market as long as regulatory price caps don’t get in the way. *cough* California.
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