Own Woodside (ASX:WPL) shares? Why this expert is watching LNG demand in Asia

LNG prices have soared amid resurgent energy demand and limited new supply coming online in 2021.

| More on:
Man in yellow hard hat looks through binoculars as man in white hard hat stands behind him and points.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Woodside Petroleum Limited (ASX: WPL) share price is in the green this afternoon even as the S&P/ASX 200 Index (ASX: XJO) is dipping lower.

At time of writing, Woodside shares are up 1.03%, trading at $21.56, while the ASX 200 is down 0.07%.

Why Woodside shares are in the spotlight

Woodside shares have been in the spotlight in recent weeks as the energy giant fights off a last-ditch legal challenge to its $16.5 billion Western Australian Pluto LNG project.

The company forecasts the massive project will provide some 30 years of LNG exports. It expects to complete the development in 2026. Provided, of course, the legal challenge isn't upheld by the Supreme Court of Western Australia.

Although Woodside has already received the official go-ahead from Western Australian regulators, the Conservation Council of Western Australia (CCW) announced last week it would challenge the works approval for the Pluto Train 2 project.

CCW, represented by the Environmental Defenders Office, believes WA authorities erred in granting permission for the development. Among other things, they say the lifetime greenhouse gas emission – and the impact on national treasures like the Great Barrier Reef – were not properly taken into account.

Why this expert is eyeing LNG demand in Asia

New fossil fuel developments are facing an uphill battle across Australia and much of the developed world.

With nations pledging to reduce their emissions, environmental groups are hoping that if the Pluto 2 Train project does go ahead, it will be the last major project Down Under to do so in Australia. A development that would likely pose significant headwinds for Woodside shares.

However, Curtin University energy economist Roberto F Aguilera, isn't so sure.

According to Aguilera (quoted by ABC News):

The development of this very large project will secure their ability to provide LNG for decades to come… These are very capital intensive projects so they're not overly influenced by current events.

[The] long-term strategy will be asking, 'Will there be long-term demand for LNG, particularly in Asia?'

So can Woodside shareholders expect the company to ditch its LNG plans?

"It's probably wishful thinking to get out of natural gas because they've invested so many billions in this very capital-intensive, long-life infrastructure," Aguilera said.

More likely, we'll see Woodside continue to work to reduce the carbon footprint of its LNG operations to address some of the concerns against its current and future developments.

According to Aguilera:

The company will have to make the case that gas and LNG is compatible with a low-carbon future. By using renewables like solar to power the gas developments, like the liquefaction, for example, which is energy intensive … all of this will help them to obtain that social licence to be able to proceed with future gas or LNG projects…

He added:

Maybe two to three years ago gas became deeply unpopular. But longer term, I think it will be realised that achieving climate goals is very, very difficult in the absence of using gas as a transition fuel.

How have Woodside shares been performing?

Woodside shares have slipped 7% so far in 2021, while the ASX 200 is up 8% in that same time.

Over the past month, the Woodside share price is down that same 7%.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Energy Shares

Worker inspecting oil and gas pipeline.
Energy Shares

3 headwinds facing ASX 200 energy stocks in 2025

After a tough 12 months, what’s ahead for ASX 200 energy stocks in 2025?

Read more »

Man holding Australian dollar notes, symbolising dividends.
Energy Shares

Dividend investors: Top ASX energy shares for November

These are the energy stocks I would buy for dividend income.

Read more »

Smiling attractive caucasian supervisor in grey suit and with white helmet on head holding tablet while standing in power plant.
Energy Shares

Why is the Woodside share price outperforming today?

Woodside shares are marching higher today. Let’s find out why.

Read more »

A corporate executive in a suit and wearing boxing gloves slumps in the corner of the ring representing the battered Zip share price and consideration reportedly being given to dumping the company's UK operations
Energy Shares

Down 55% in 6 months, why I think Paladin Energy shares are now a bargain buy

I think ASX 200 investors have overreacted in selling down this ASX 200 uranium stock.

Read more »

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Energy Shares

Is Woodside stock a buy for its 8% dividend yield?

Woodside's dividends look fat, but proceed with caution...

Read more »

A man sits wide-eyed at a desk with a laptop open and holds one hand to his forehead with an extremely worried look on his face as he reads news of the Bitcoin price falling today on his mobile phone
Share Fallers

ASX 200 uranium stock alert: Paladin Energy shares just crashed 29%!

Paladin Energy shares are under intense selling pressure on Tuesday.

Read more »

A happy woman wearing a sweatband at the gym celebrates success or an achievement by puffing up and flexing her muscles with pride.
Energy Shares

1 ASX dividend stock down 43% I'd buy right now

Here’s a dividend stock worth getting energised about.

Read more »

A happy woman flies with arms outstretched on her boyfriend's back on the beach at dusk.
Energy Shares

2 ASX utility stocks that are smart buys for Aussies in November

These two could be standouts, according to top brokers.

Read more »