Woodside cuts spending, projects deferred in current climate

WOODSIDE Petroleum will slash spending by 50 per cent and is deferring a final investment decision on several key projects amid the uncertain economic climate arising from the spread of COVID-19.

The Perth-based company yesterday said “decisive and swift action” was required in an uncertain global investment environment.

The pandemic, as well as a global oversupply of crude oil and LNG, has led to a collapse in benchmark crude prices.

Woodside will defer an investment decision on its $US11 billion ($A18.2bn) Scarborough gas project in Western Australia, which it jointly owns with BHP. It will also defer final investment decisions for the Pluto Train 2 and the $US20 billion Browse projects.

Chief executive Peter Coleman said the company was responding to the lower, more volatile oil price environment by reducing its expenditure for 2020 and delaying final investment decisions on growth projects.

“These are extraordinary times, that no one could have foreseen,” he said. “But Woodside

enters this period of significant uncertainty with one of the stronger balance sheets in our industry and worldclass, low-cost producing assets, which are resilient to commodity price fluctuations.” He also said all steps were being taken to protect those who worked for the company.

“Our immediate priorities have been minimising the risks from COVID-19 to staff, contractors and the communities where we operate, and maintaining our ability to deliver gas to Western Australia and overseas customers who depend on us,” he told the ASX yesterday.

Mr Coleman said the development of Scarborough and Browse gas resources through Woodside’s proposed Burrup

Hub remained a highly competitive LNG investment opportunity and would provide significant economic returns for decades to come.

He also said Woodside’s production guidance remained unchanged. Meanwhile, smaller firm Beach Energy has targeted a 30 per cent deferral in FY21 capital investment relative to prior planning.