Woodside turns up the heat – LNG expansion, strategic partnerships, and hydrogen future
Woodside Energy Group Ltd (ASX: WDS) (formerly Woodside Petroleum Ltd) is Australia’s largest independent dedicated oil and gas exploration and production company. With its share price down 46 per cent since September 2023, it might pay investors to understand the transformation occurring at the company and the reason it is now a three per cent position in The Montgomery Fund and a 2.3 per cent position in The Montgomery [Private] Fund.
While Woodside remains primarily a petroleum company – it’s share price declines are in no small part due to the decline in oil prices from US$124/barrel in 2022 to US$61/barrel – it has expanded into new energy initiatives and describes itself as having begun a new chapter as a global energy company. Beginning when Woodside merged with BHP Petroleum (ASX: BHP) in 2022, Woodside has become a larger global energy company with oil, gas, and new energy pillars.
Woodside Energy is undergoing a strategic transformation to become a global Liquefied Natural Gas (LNG) and infrastructure powerhouse. Through its ambitious Louisiana LNG project, strategic infrastructure sell-downs, and investments in new energy sectors like hydrogen, Woodside is redefining its role in the global energy landscape.
The Louisiana LNG project: a cornerstone of growth
At the heart of Woodside’s transformation is the US$17.5 billion Louisiana LNG project, located on the Gulf of Mexico. Approved in April 2025, this three-train facility is designed to produce 16.5 million tonnes per annum (Mtpa) of liquefied natural gas, significantly boosting Woodside’s global LNG supply capacity to approximately 24 Mtpa by the 2030s – representing over five per cent of the global LNG market.
The project, expected to deliver first gas in 2029, is a bold step toward establishing Woodside as a global LNG leader. It capitalises on growing demand in Europe and Asia, underpinned by a projected 13 per cent internal rate of return and a seven-year payback period. By leveraging a supportive U.S. administration and strategic partnerships, Woodside is positioning the Louisiana LNG project as a cornerstone of its global expansion.
Strategic infrastructure sell-down to Stonepeak
A key element of Woodside’s transition into an infrastructure-focused company is its partnership with Stonepeak, a U.S.-based private equity (PE) firm. In April 2025, Woodside sold a 40 per cent stake in Louisiana LNG Infrastructure LLC (InfraCo) to Stonepeak for US$5.7 billion, with Stonepeak covering 75 per cent of capital expenditures in 2025 and 2026. This sell-down allows Woodside to de-risk the project, optimise capital allocation, and focus on operations while retaining a 60 per cent majority stake.
Woodside is also exploring further sell-downs, with plans to divest an additional 20–30 per cent stake in the project. Interest from potential partners, including Kuwait Foreign Petroleum Exploration (KUFPEC), has surged since the project’s final investment decision, reflecting confidence in its long-term value. This strategy of partnering with infrastructure investors underscores Woodside’s shift toward a capital-efficient model that prioritises scalability and financial flexibility.
Diversifying into new energy: hydrogen and beyond
Beyond LNG, Woodside is investing in new energy initiatives to future-proof its portfolio. The company is advancing hydrogen production through projects like H2Perth, H2TAS, and H2OK, which aim to supply clean hydrogen for heavy transport, industrial applications, and energy storage. These projects align with global decarbonisation trends and position Woodside as a player in the emerging hydrogen economy.
For example, H2Perth is designed to produce hydrogen for domestic and export markets, while H2TAS in Tasmania focus on regional hydrogen supply chains. These initiatives, while starting as a small proportion of the overall business, demonstrate Woodside’s commitment to diversifying its energy offerings and leveraging its infrastructure expertise to support sustainable energy solutions.
Strategic partnerships fuelling success
Woodside’s transformation is bolstered by strategic partnerships that enhance its operational and market capabilities. An agreement with BP (LON: BP), signed in April 2025, secures the supply of up to 640 billion cubic feet (Bcf) of natural gas for the Louisiana LNG project, starting in 2029. This deal ensures a reliable feed gas supply, de-risking the project and strengthening Woodside’s position in the U.S. Gulf Coast’s competitive LNG market.
Additionally, Woodside’s acquisition of Tellurian’s Driftwood LNG project in October 2024 for US$1.2 billion laid the foundation for the Louisiana LNG development. By rebranding and advancing the project, Woodside has demonstrated its ability to integrate and optimise assets to drive global growth.
Global ambitions and infrastructure focus
Woodside’s Louisiana LNG project and hydrogen initiatives are part of a broader strategy to expand beyond its traditional Australian base. The company’s operations now span North and South America, Africa, and Australia. By investing in large-scale LNG infrastructure and new energy projects, we believe Woodside is positioning itself to meet rising global energy demand while navigating the transition to a lower-carbon future.
Sell-side enthusiasm for Woodside – in spite of the steep share price decline – is reflected in analyst reports that note the BP supply deal and Stonepeak partnership signal industry confidence in the Louisiana LNG project’s potential to reshape global LNG supply chains. However, environmental concerns persist, with critics arguing that the project’s 40-year lifespan could contribute 1.6 billion tonnes of greenhouse gas emissions, putting pressure on Woodside to balance its LNG ambitions with sustainability goals.
Woodside Energy’s transition into a global LNG and infrastructure powerhouse marks a pivotal moment in its 70-year history. The Louisiana LNG project, coupled with strategic sell-downs to Stonepeak, previous selldowns in Pluto train 2 LNG in Australia to fund manager Global Infrastructure Partners (GIP), and investments in hydrogen projects like H2Perth, H2TAS, and H2OK – showcases Woodside’s ability to adapt to evolving energy markets. Woodside is arguably well-positioned to lead the global LNG market while exploring sustainable energy solutions by forging partnerships with industry giants like BP and leveraging its infrastructure expertise.
The company’s ability to balance profitability, innovation, and environmental responsibility will define its legacy as a global energy leader.
Disclaimer
The Montgomery Fund and the Montgomery [Private] Fund own shares in Woodside Energy Group and BHP. This article was prepared on 12 May 2025 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Woodside Energy Group or BHP you should seek financial advice.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
