Woodside’s Louisiana LNG Stake Sell-Down: A Strategic Move to Capitalize on Global Demand
15min read Woodside Energy’s Louisiana LNG project, a $17.5 billion venture to build one of the largest greenfield liquefied natural gas (LNG) facilities in the U.S., has entered a pivotal phase. The company aims to reduce its equity stake by an additional 20–30%, following a landmark partnership with Stonepeak, a U.S. infrastructure firm. This strategic move underscores Woodside’s ambition to balance risk, accelerate returns, and position itself as a global LNG powerhouse.
The Current Ownership Structure: A 60/40 Split with Stonepeak
After securing final investment decision (FID) in April 2025, Woodside now holds a 60% equity stake in the Louisiana LNG project, down from its initial 100% ownership. The remaining 40% is owned by Stonepeak, which committed $5.7 billion to the project—covering 75% of capital expenditures (capex) in 2025 and 2026. This partnership has already reduced Woodside’s direct financial burden, freeing up capital for dividends and other projects like its Scarborough LNG venture in Australia.
Why Further Sell-Downs Make Strategic Sense
The push for an additional 20–30% stake reduction aligns with Woodside’s broader financial discipline. The project’s strong fundamentals—a projected 13%+ internal rate of return (IRR) and a seven-year payback period—have attracted investor interest. By divesting further, Woodside aims to:
1. De-risk the project: Share construction and operational risks with partners like Stonepeak and potential new stakeholders.
2. Boost liquidity: Free cash flow to reward shareholders through dividends or reinvest in high-potential projects.
3. Attract strategic partners: Align with firms like Kuwait Foreign Petroleum Exploration (KFPEO) or Japan’s JERA, which could secure long-term supply agreements and geopolitical leverage.
Partnerships Fueling Growth and Stability
The Louisiana project’s success hinges not just on equity stakes but on robust partnerships. Key alliances include:
- Uniper: A 13-year supply agreement for 1 million tonnes annually, bolstering revenue visibility.
- bp: A gas supply deal leveraging MiQ methane certification, aligning with Woodside’s net-zero goals by 2050.
- Bechtel: The EPC contractor’s lump-sum turnkey agreement ensures cost certainty, critical given inflation risks.
These partnerships reduce execution risk and strengthen Woodside’s position in Europe and Asia, where LNG demand is surging due to decarbonization policies and energy security needs.
Risks on the Horizon
Despite its promise, the project faces challenges:
- Geopolitical hurdles: U.S. trade policies and tariffs on non-domestic equipment could inflate costs.
- Supply chain delays: Global competition for engineering talent and materials may push timelines.
- LNG price volatility: While current prices hover around $13/mmBtu, a sustained dip could pressure margins.
The Path Forward: A 50% Ownership Target
Woodside aims to reduce its stake to 50% or lower through further sell-downs. Discussions with KFPEO and JERA are advancing, though terms remain contentious. A 50% ownership would mirror the company’s approach to the Scarborough project, balancing control with diversified capital.
Conclusion: A Prudent Play for Long-Term Value
Woodside’s Louisiana LNG project is a masterclass in strategic capital management. By leveraging partnerships like Stonepeak’s and pursuing further equity sales, the company is optimizing returns while mitigating risks. With a $17.5 billion project that will create 15,000 jobs and solidify Woodside’s LNG leadership, the stakes are high—but the rewards are even greater.
The numbers tell the story: a 13%+ IRR, a 40+-year asset lifespan, and long-term supply deals totaling 1.6 million tonnes annually position this project as a cornerstone of Woodside’s growth. For investors, the Louisiana LNG sell-down isn’t just a financial maneuver—it’s a bold step toward building a sustainable, globally competitive energy giant.
