Woodside’s African oil delayed as costs jump

A note from investment analysts E&P said the setback might alter investor perception that Woodside was improving its ability to deliver projects on time and on budget. E&P said this was important as Woodside was in the early stages of the Scarborough gas project in WA and the Trion oil development off the coast of Mexico.

Woodside operates and owns 82 per cent of Sangomar, which is expected to produce about 230 million barrels of oil in its first stage. When the project was approved in January 2020, Woodside had just a 32 per cent stake but has twice had to increase its shareholding to keep the project on track.

In December 2020, it bought Cairn Energy’s 36 per cent after the UK company moved to sell out to Russia’s Lukoil, which could have resulted in the project coming under US sanctions. Woodside acquired another stake from ASX-listed energy minnow FAR, which was unable to finance its share of the capital cost of the project, in 2021.

In mid-2022, Woodside abandoned its attempt to sell down its interest. The delay at Sangomar does not affect Woodside’s production guidance for 2023.

Woodside shares were down less than one per cent to $35.65 a share in midday trading. The company will release its second-quarter results on Wednesday.