Australia’s biggest independent oil and gas producer Woodside Petroleum Ltd. has planned to invest $5 billion, primarily in hydrogen, in line with a global push for cleaner energy
by 2030. The investment is stemmed from the expected cash flow from its proposed merger with BHP Group's (BHP.AX) petroleum arm.
The Perth-based firm will undertake initiatives such as a concentrated solar pilot in California and a hydrogen collaboration with Hyzon Motors Inc. in the United States. It will also deliver
the $12 billion Scarborough field and liquefied natural gas project off the coast of Western Australia.
On Wednesday, Woodside Chief Executive Meg O'Neill announced her energy transition plan, which she claimed was centred on the assumption that the company's $28 billion mergers with
BHP's petroleum unit.
"Our customers, investors and other stakeholders are increasingly demanding low-cost, low-carbon energy," said Meg O'Neill. "We're working on improving our procedures
to make sure that we're 'match fit' for the challenges ahead," she added.
According to the CEO, the best options for Woodside to use its oil and LNG skills while maintaining shareholder returns in the energy transition are to invest in hydrogen and carbon capture
and storage.
On new energy projects, Woodside will aim for an internal rate of return of more than 10% and payback within ten years which is a lower bar than on riskier oil and gas projects.
The company is focusing on three hydrogen projects: two in Australia that will manufacture ammonia from hydrogen for export and one in the United States that would produce liquid hydrogen
for the domestic market.
If the merger with BHP fails, the $5 billion new energy plan will have to be reconsidered. "But again, we have complete confidence that our shareholders will support the merger,"
O'Neill said in an online strategy briefing.
In the second quarter of 2022, Woodside plans to bring the merger to a vote.