Woodside has finalised technical work to support execution readiness and completed an update of the capital expenditure requirements in the lead up to the targeted final investment decisions for the Scarborough development.
The updated cost estimate is $US12 billion ($16.2 billion), comprising $US5.7 billion for the offshore component and $US6.3 billion for the onshore component.
The cost estimate is 5 per cent higher than the previous cost estimate announced in November 2019 and incorporates: A 3 per cent cost increase in the onshore component, including modifications to Pluto Train 1; and an 8 per cent increase in the offshore component, including an increase in offshore production capacity from 6.5 Mtpa to 8.0 Mtpa of LNG and an additional well.
Woodside now expects the internal rate of return (IRR) of the integrated Scarborough and Pluto Train 2 development to be greater than 12 per cent.
Acting chief executive officer Meg O’Neill reaffirmed that the Scarborough development is a transformational project that will deliver ensuring shareholder value.
“Significant progress has been made towards our targeted final investment decision on Scarborough and Pluto Train 2 this year,” she said.
“The cost update includes value-accretive scope changes to deliver an approximately 20 per cent increase in offshore processing capacity and to modify Pluto Train 1 to allow increased Scarborough gas processing. It also reflects the work undertaken with our contractors to optimise the execution schedule and manage costs in preparation for FID.”
O’Neill further highlighted that Woodside’s contracting strategy for Scarborough reduces cost risk, with 90 per cent of total project contractor spend structured as lump-sum and fixed rate agreements.
The company has also commenced the formal processes for selling down its interest in Pluto Train 2 and Scarborough as it target the investment decision later this year.
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