The Woodside Petroleum Ltd [ASX:WPL] share price is down today around 1.6% at time of writing. Woodside Petroleum is Australia’s largest independent oil and gas company.
The company announced today they were modifying their LNG long-term sale and purchase agreement with Uniper Global Commodities SE.
What’s the deal?
In the new deal, Woodside will be doubling the LNG supply to Uniper from one million tonnes per annum (Mtpa) this year to two Mtpa from 2026.
Though the company also said the 2025 LNG supply is conditional on the decision on Scarborough. Woodside is looking to expand Scarborough with a second LNG train, Pluto Train 2, with a capacity of five million tonnes per annum (Mtpa). The investment decision has been delayed till the second half of next year.
Both companies announced that they are looking to work together on carbon neutral LNG and hydrogen opportunities.
Uniper CEO Andreas Schierenbeck said:
‘With this agreement Uniper continues its path to implement its strategy of growth in Asia, trading in cleaner fuels and decarbonisation. We are also pleased to strengthen our great relationship with Woodside with the additional volume agreed for this contract.’
WPL share price down after the news
But while this should have been good news for share prices, shares were down after oil prices fell, affecting Woodside shares.
Both Brent crude and WTI were down 2.3% overnight. At time of writing WTI is trading at US$51.93 a barrel and Brent is at US$54.60 a barrel.
A stronger US dollar along with the pandemic spreading pushed oil prices down. The virus continues to grow with more lockdowns in Europe and China.
While oil prices have seen some increases after Saudi Arabia said they would be cutting oil production, the question is how more lockdowns will affect demand?
Oil demand collapsed in April when the world went into lockdown forcing Woodside to write down US$4 billion earlier this year. Woodside’s shares are down 22% in the last 12 months.
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