PERTH (miningweekly.com) – Australian oil and gas producer Woodside on Tuesday announced that it would exit its 50% non-operated participating interest in the Kitimat liquefied natural gas (LNG) development, in British Columbia.

Woodside told shareholders that the exit would impact the company’s net profit after tax for 2021 by between $40-million and $60-million, with the costs to be excluded from the underlying net profit after tax for the purposes of calculating a dividend.

Acting CEO Meg O’Neill said that exiting the Kitimat LNG project would allow Woodside to focus on the delivery of higher value opportunities in Australia and Senegal.

The exit will include the divestment or wind-up and restoration of assets, leases and agreements covering the 480-km Pacific Trail pipeline route and the site for the proposed LNG facility, while Woodside would retain a position in the Liard Basin upstream gas resource.

Woodside’s decision follows US energy major Chevron’s withdrawal from the Kitimat operation in December 2019, as the company reduced funding to various gas-related opportunities.

“Following Chevron’s decision to exit Kitimat LNG and the subsequent decision in March 2021 to cease funding further feasibility work, Woodside undertook a comprehensive review of our options for the project and our wider development portfolio,” O’Neill said on Tuesday.

“The Kitimat LNG proposal was designed to develop a new source of LNG to supply Asian markets in the latter part of this decade. However, we have decided to prioritise the allocation of capital to opportunities that will deliver nearer-term shareholder value.

“Woodside is focused on working towards the targeted final investment decision for the Scarborough LNG development in Western Australia in the second half of 2021 and the continued successful execution of our Sangomar oil project offshore Senegal.

“Retaining an upstream position in the prolific Liard Basin provides Woodside a low-cost option to investigate potential future natural gas, ammonia and hydrogen opportunities in British Columbia,” said O’Neill.