Australian energy giant Woodside is working to firm up a gas supply deal which will be supplied from its domestic portfolio, including gas from its Scarborough development located off Australia.
Woodside said on Thursday it has entered into a non-binding memorandum of understanding (MOU) with Perdaman Chemicals and Fertilisers for the supply of natural gas.
Under the terms of the MOU, Woodside will supply approximately 125 terajoules per day of domestic gas for use in Perdaman’s proposed 2 million tonne per annum urea plant on the Burrup Peninsula.
Natural gas will be supplied from Woodside’s portfolio of domestic gas underpinned by the proposed Scarborough development. Supply will start from the early 2020s for a period of between 20 and 25 years.
Woodside completed the $444 million acquisition of ExxonMobil’s interest in the Scarborough gas field back in March. The leases acquired contain the Scarborough, Thebe and Jupiter gas fields, which are estimated to contain gross (100%) contingent resources (2C) of 9.2 Tcf of dry gas.
Woodside, with its partner BHP Billiton, is now working on the development concept prior to entering FEED. A final investment decision for the project is expected to be made in 2020 and first production from the development is expected in 2025.
Woodside and Perdaman have committed to negotiate in good faith a gas sale and purchase agreement consistent with the terms of the MOU this year.
Woodside CEO, Peter Coleman, said: “Supplying domestic gas from our portfolio will underpin a fresh wave of investment in the Pilbara region.
“Our Burrup Hub projects can support the economic diversification of the region in the years ahead and ensure we are positioned to meet long-term global LNG demand,” he said.