Woodside Petroleum has slashed its spending this year by 50%, to around $2.4 billion, but Senegal’s Sangomar development should progress as planned.
Major domestic LNG projects have been pushed back, such as Scarborough, Pluto Train 2 and Browse, but Sangomar – and the Pyxis Hub and Julimar-Brunello Phase 2 – will continue as planned. The production impact from these deferrals will not be felt this year, with output expectations unchanged at 97-103 million barrels of oil equivalent.
In mid-February, Woodside had said Scarborough and Pluto’s second train should be approved this year, with Browse coming late in 2021.
The Sangomar plan stands alone in being a greenfield development in a new area for the Australian company. The Pyxis Hub and Julimar-Brunello work will come as subsea tiebacks for existing projects, Pluto LNG and Wheatstone LNG respectively.
FID was taken on Sangomar in mid-January. First oil was targeted for 2023.
Woodside did not change its expectation for the development but said that it was “taking early action” to manage the impact of coronavirus on the supply chain and project schedule. It went on to say it was working with all parties involved on Sangomar to “reduce total cost and near-term spend whilst protecting the overall value of the investment”.
This comes despite notice from junior partner FAR on the Sangomar development that it was struggling to finance its share of costs on the field.
Woodside is a major LNG producer. The company said the dramatic fall of oil prices will pull LNG prices down late in the second quarter.
The company is clearly worried that prices could fall lower. Woodside said it had hedged 11.85 million barrels of oil, around 43,090 bpd, between April and December at an average price of $33.47 per barrel.