Australia's Woodside Energy has enlisted U.S.-based Williams as an investor and pipeline operator of its Louisiana liquefied natural gas plant, to tap its infrastructure experience and ease cost pressures as construction ramps up.
Under the arrangement, Williams will get a 10% stake in Louisiana LNG's holding company and 80% of the Driftwood pipeline that will supply feed gas to the $17.5 billion project.
Williams, which operates more than 33,000 miles (53,108 km) of pipeline across 24 U.S. states, will pay Woodside $378 million and contribute $1.9 billion towards the project’s construction costs.
Woodside CEO Meg O’Neill told Reuters her company had expertise with developing LNG projects, but it needed to partner with an experienced operator of onshore pipelines in the U.S. like Williams.
The Louisiana LNG venture forms part of Woodside’s major expansion strategy into North America, betting on a pro-fossil fuel U.S. administration and growing global demand for gas.
O’Neill said Woodside was "off to the races" with the project and its construction workforce had ramped up ahead of first production expected in 2029.
Woodside is looking to sell a further 10% to 20% in the holding company after the Williams deal to reduce its overall interest in the project to 50%.
"We do want to bring other investors into the project," O'Neill said. "We're not going to set a timeline on it. We'll continue to be patient, but the window is narrowing."
Williams is the first partner Woodside has added since giving Louisiana LNG the final go-ahead in April.
Before that, it sold a 40% stake in the project's infrastructure company to U.S. investor Stonepeak for $5.7 billion.
MST Marquee analyst Saul Kavonic said Williams was a “very strong partner” and would help ease balance sheet pressures associated with the huge project.
“It's going to really raise the profile of the project within the U.S.,” he said. “From an investor perspective, the sell-down is viewed positively.”
But further sell-downs would be needed to affirm the project’s value, he added.
Shares in the Australian company gained as much as 4.1% to A$24.11 on Thursday.
Once Louisiana LNG is complete, Woodside is keen to tap European markets in particular as they cut LNG imports from Russia, O'Neill said.
Louisiana LNG already has a supply deal with Germany’s Uniper and a heads of agreement with Turkey’s BOTAS.
“There's very strong interest in LNG from our project from those customers in Europe,” she said.
“They're absolutely going to need LNG from other sources, and the U.S. is going to be one of those key sources.”
Louisiana LNG is expected to have an initial annual production capacity of 16.5 million metric tons of the super-chilled fuel.
