Woodside Energy (ASX: WDS) Projects 50% Surge in LNG Consumption Anticipated

In a recent interview, CEO Meg O'Neill shared Woodside Energy Group Ltd.'s (ASX: WDS) optimistic forecast, anticipating a remarkable 50% surge in liquefied natural gas (LNG) consumption over the next decade. This projection positions Woodside as a key player in meeting the rising demand for LNG, driven primarily by emerging markets in Asia.

Emerging Asia's Role in Driving Demand Growth

O'Neill pointed out that the signs of this substantial demand growth are particularly evident in emerging Asia. Despite the anticipation of new supply entries into the market, Woodside remains confident that the escalating demand will effectively absorb the surplus over the coming years.

Woodside's Contrasting View Amid Industry Debates

This bullish outlook from Woodside stands in contrast to recent adjustments made by industry giants like Shell Plc, which scaled back its LNG consumption forecast for 2040 to an increase of over 50%. Woodside, however, maintains a positive stance, emphasizing the capacity of LNG to complement intermittent renewable energy sources.

Woodside's LNG Expansion Plans and Recent Setbacks

Woodside has consistently advocated for the necessity of additional gas to support the expansion of intermittent renewable energy sources. The company remains open to further expansions in its LNG business, a sentiment reinforced by its ongoing AU$12 billion Scarborough LNG project in Australia.

Despite its positive trajectory, Woodside faced a setback in its attempt to merge with Santos Ltd., which would have created a substantial LNG production force in the Asia-Pacific region. While expressing disappointment in the deal's collapse, O'Neill emphasized Woodside's strong portfolio assets.

Woodside's Strategic Approach and Future Outlook

Apart from the Scarborough project, Woodside explores development options like Browse, Sunrise, and Calypso. Additionally, the company continues to evaluate potential acquisitions, demonstrating its commitment to strategic growth.

O'Neill highlighted the M&A team's active pursuit of opportunities while emphasizing a disciplined approach. Any potential acquisition must align with Woodside's strategy, capabilities, and deliver tangible value.

Global Perspectives: Qatar's Optimism and US Uncertainty

Qatar, a major player in the LNG market, shares Woodside's optimism about rising demand. Recently, it announced plans for a 13% increase in annual capacity, underscoring the positive industry outlook.

Woodside voiced concerns about the temporary halt on new LNG export licenses imposed by the White House. This move, aimed at studying the impact on climate change and national security, introduces uncertainty about the U.S. as a reliable LNG supplier.

Woodside's 2023 Performance

Woodside reported a 37% decline in underlying profit in 2023, attributed to falling prices and significant impairments amounting to AU$1.5 billion.

Asian LNG spot prices hit their lowest since 2021 due to mild weather and high inventories. Woodside anticipates a delicate balance between supply and demand for 2024, with potential price boosts from Middle East developments or increased demand from China.

Anticipated Demand Rebound

Looking ahead, O'Neill expects a demand rebound in 2025, with buyers like Bangladesh and India returning to the market after the 2022 energy crisis, driven by decreasing prices.

Conclusion

In conclusion, Woodside Energy Group Ltd. stands resilient in the face of market challenges. Despite setbacks and industry uncertainties, its strategic approach, diversified projects, and optimistic outlook position it as a key player in the ever-evolving LNG landscape.