commonwealth lng


Woodside signs new US LNG purchase deal

Angela Macdonald-Smith
Senior resources writer

Woodside Petroleum has signed a flexible, long-term deal to purchase LNG from a US Gulf Coast LNG export project, underlining the expected international competitiveness of gas sourced from the fast-growing US export market.

The heads of agreement inked with Commonwealth LNG involves purchasing 2 million tonnes a year of LNG from Commonwealth’s proposed export terminal in Cameron, Louisiana over 20 years.

Purchases are scheduled to start in the June quarter of 2026. Chief executive Meg O’Neill said the non-binding deal “secures access to competitive LNG in the Atlantic Basin and provides Woodside with the ability to build market scale through acquiring low-cost supply”.

Woodside already has an arrangement to buy LNG from Cheniere Energy’s LNG export terminal in Texas. Bloomberg Commonwealth, led by founder Paul Varello, is planning an 8.4 million-tonnes-per-year LNG liquefaction facility involving six trains on the west bank of the Calcasieu Ship Channel at the mouth of the Gulf of Mexico, with start-up planned in the second quarter of 2026.

It describes the project as a “next-generation” export facility, one designed to accommodate the changing requirements of buyers as regards the length of supply contracts, pricing and flexibility. It will also use a modular construction method, involving mostly off-site construction work, to minimise cost and development timing.

The proposed deal comes as the US took over from Australia and Qatar as the world’s biggest LNG exporter for the first time last month, fuelled by its huge source of cheap shale gas that transformed it from a net gas importer to a top exporter in less than a decade.

It adds to Woodside’s existing arrangements to source LNG from the US, including from Cheniere Energy’s Corpus Christi LNG export project in Texas, a deal that at one stage was out of the money because of a global gas supply glut, which has since disappeared.

Woodside said the deal with Commonwealth allows it to reduce or even eliminate its obligation to buy LNG from the terminal as the US company secures commitments from other buyers for long-term LNG purchases. At the same time Woodside has an option to increase its purchases of LNG from the terminal, involving an extra 500,000 tonnes a year.

Mr Varello said the heads of agreement with Woodside “is testament that Commonwealth’s approach to lowering the cost of LNG produced in the US is gaining prominent support”.

Commonwealth reportedly ran a tender last year where potential buyers of LNG submitted offers for LNG pricing, volume and contract duration.

The preliminary deal is conditional on firming up a detailed LNG sales and purchase contract, on approvals being received and on a final go-ahead being given for construction of the Commonwealth terminal, which was delayed in 2020 when prices and demand dropped.

Woodside is set to significantly expand its presence in North America through the agreed $41 billion merger deal with BHP Petroleum, which has major interests in offshore oil and gas production in the Gulf of Mexico.