博彩对冲

The Issue

Woodside's upcoming AGM could get testy as some activist shareholders again question Woodside鈥檚 approach to emissions reduction and the energy transition. Woodside plans to reduce its net operational (Scope 1 and 2) emissions by 15% by 2025, 30% by 2030 and to net zero in 2050 from an average 6.32 million tons of emitted CO2 between 2016-20. Unlike some other international oil companies, Woodside has not scaled back its decarbonization goals. But some investors want the Australian company to take stronger action and use more mitigation methods, including reducing its heavy reliance on carbon offsets and setting an end-use (Scope 3) emissions target.

High Rates of Shareholder Opposition

A large percentage of Woodside's shareholder base feels the company should be doing more to address climate risk. Almost 49% of shareholders voted against Woodside's climate plans at the 2022 AGM, with investor opposition rising to 58.4% at last year's AGM.

This year, activist group Australasian Centre for Corporate Responsibility (ACCR) has urged shareholders to vote against three of the company's directors over poor returns and inadequate climate risk management. Following the unprecedented nonbinding vote last year, senior executives promised to step up engagement with investors. However, the ACCR, which works to influence corporate behavior on ESG issues, claims the board has not altered its strategy.

Despite last year鈥檚 majority shareholder vote against Woodside鈥檚 Climate Transition Action Plan (CTAP), the board鈥檚 response since then has largely been to restate the existing strategy. 鈥淲oodside still has no credible plan to become Paris-aligned, and its CTAP does not have market support,鈥� the ACCR said recently.

Woodside said in its this month that it does not believe ACCR鈥檚 analysis to be 鈥渟ound, objective or undertaken with the intent of providing balanced perspectives on Woodside鈥檚 business.鈥�

Woodside argues that only about one-third of all shareholders opposed its climate plan last year, given that 41% did not vote on the resolution.

After being re-elected last year, Woodside's tough-talking chairman, Richard Goyder, told the 2024 AGM that drastic changes were not in the cards because far-reaching transformations risk 鈥渆roding value for all shareholders and contributing to a disorderly energy transition.鈥�

Saul Kavonic, an energy analyst with Sydney-based MST Marquee, told 博彩对冲 that "peak ESG has passed. Investors care far less about climate plans this year. Far more investors want to see Woodside invest less in green projects after the low-carbon ammonia acquisition last year was received very poorly by markets."

Big Reliance on Carbon Offsets

Woodside鈥檚 emissions reduction strategy has been criticized for its heavy reliance on carbon offsets. Critics argue it is not innovative and fails to address the root causes of emissions. Woodside counters that it is on a credible path to cut emissions and must prioritize financial returns for the bulk of its investors.

Woodside manages a portfolio of more than 20 million credits, according to its 2024 annual report. The company roughly doubled the volume of carbon credits it retired in 2024, to 1.3 million, to help meet its emissions reduction goals. This was required because Woodside鈥檚 share of gross Scope 1 and Scope 2 emissions increased to 6.78 million tons of CO2 equivalent in 2024 from 6.19 million tons CO2e in 2023, partly due to the start-up of oil and gas production at its deepwater Sangomar project offshore Senegal.

Using 鈥渃redits as offsets remains an important part of Woodside鈥檚 approach to Scope 1 and 2 greenhouse gas emissions due to the high potential cost of large-scale abatement options,鈥� the ACCR report said. Woodside plans to cut its net Scope 1 and 2 emissions by 15% by 2025 and 30% by 2030 from an average 6.32 million tons emitted between 2016 and end-2020.

All of Woodside鈥檚 Scope 1 and 2 emissions reductions in 2024 were attributable to offsets, ACCR said.

The company faces mounting pressure to adopt more substantive emission reduction measures, such as electrifying operations and implementing emissions capture technologies.

And on Low-Energy LNG

Speaking at the company's sustainability briefing in early April, Woodside CEO Meg O鈥橬eill championed the role of natural gas, mainly in the form of LNG, as a key transition fuel. The CEO pointed to reductions in emissions as countries switch from coal to gas and noted that the switch creates significant opportunities for large-scale LNG projects. However, 鈥淭rying to definitively prove that our cargo of LNG displaced coal that would have otherwise been burned is a very difficult strategy,鈥� O鈥橬eill admitted.

Woodside has not made substantial progress in electrifying its LNG operations, particularly at its emissions-intensive aging NWS complex in Western Australia. Five NWS liquefaction trains were commissioned between 1989 and 2008. Partners in NWS LNG include BP, Shell, Mitsui and Mitsubishi.

鈥淒ecarbonizing ... facilities that were designed in the 1990s or early 2000s gets harder, but we have teams working on it,鈥� O鈥橬eill said.

Large-scale abatement options, such as retrofitting carbon capture and storage (CCS) on existing LNG facilities, are not currently commercially viable as they cost US$200-US$500 per ton CO2e, the Woodside CEO explained.

In the meantime, the company is looking at options that cost up to US$80/ton CO2e, such as improving energy efficiency, methane management and using more renewable energy.

However, Woodside is exploring some large-scale abatements, including CCS, particularly at its Pluto LNG site. The first Pluto LNG train started operations in 2012. Train 2 is due to start operations in 2026.

In the US, Woodside is close to taking FID on its greenfield Louisiana LNG project, which will have markedly lower emissions per ton of LNG produced than the company鈥檚 Australian facilities.

According to Woodside鈥檚 , its emissions remain lower than peer industry benchmarks.

Woodside aims to achieve near-zero methane emissions from its operated upstream facilities by 2030. Reduction initiatives include upgrades to compressor seals, flaring systems, improved leak detection and repairs as well as design improvements to minimize venting. In 2023, Woodside cut its methane emissions by 168,000 tons CO2e.

Woodside said it has already invested US$2.5 billion of its targeted total investment of US$5 billion in new energy schemes by 2030.

Key Role for Beaumont Ammonia

Aside from the use of offsets, Woodside is banking heavily on its US new ammonia project to help cut emissions.

Last year's US$2.35 billion acquisition of the Beaumont New Ammonia Project in Texas 鈥� close to the Louisiana LNG site 鈥� forms the centerpiece of Woodside's low-carbon services energy strategy and is now a 鈥減riority鈥� in the company's new energy portfolio.

The plant will produce ammonia with unabated emissions from 2025 and abated blue ammonia derived from natural gas, with Exxon Mobil-led CCS, from 2026.

鈥淭he business case for the project exceeds Woodside鈥檚 capital allocation target of 10% internal rate of return and payback of less than 10 years,鈥� Woodside Executive Vice President Daniel Kalms told investors.

Beaumont New Ammonia 鈥減ositions Woodside in the expected lower-carbon ammonia market in Europe and Asia, benefiting from Woodside's existing customer relationships, marketing experience and operational expertise,鈥� the company says.

The project, which was 83% complete at the end of 2024, could contribute up to 1.6 million tons per year of CO2e abatement in the first 1.1 million ton/yr phase and the same again in a planned second phase, subject to a separate FID. Exxon鈥檚 linked CCS facility is expected to come on line in the second half of 2026, said O鈥橬eill.

鈥淭he project delivers material progress toward our Scope 3 investment and abatement targets,鈥� Woodside said.

Woodside does not have a formal Scope 3 emissions reduction target. Instead, the company has set an "abatement target" that aims to reduce customer emissions by 5 million tons of CO2e per year by 2030 through investments in new energy products and lower-carbon services. This approach focuses on facilitating emissions reductions in its value chain rather than committing to a specific cut in its own Scope 3 emissions.

Woodside鈥檚 other low-carbon projects, including various hydrogen proposals, have either been canceled or put on hold due to commercial challenges.