The Woodside Energy Group Ltd (ASX: WDS) share price is having a tough time on Tuesday.
In morning trade, the energy giant's shares are down 2% to $35.30.
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Why is the Woodside share price falling?
There are a couple of reasons why the Woodside share price is under pressure this morning.
The first is a pullback in oil prices overnight following the release of softer-than-expected economic data out of China. This sparked fears that demand for oil might be lower than forecast over the next 12 months.
In addition, the release of an update on the Sangomar Field development could be weighing on its shares today.
What's going on with Sangomar?
In April, management advised that the Sangomar Field phase one development was 82% complete at the end of the first quarter of 2023 and that first oil was expected late in the year.
Unfortunately, this morning the company revealed that it has identified remedial work required on the floating production storage and offloading (FPSO) facility.
In light of this, Woodside is now expecting delays to its first oil and higher costs.
Management is targeting first oil by mid-2024 with a total project cost of US$4.9 billion to US$5.2 billion. The latter is an increase of 7% to 13% from the previous cost estimate of US$4.6 billion.
Woodside's CEO, Meg O'Neill, said:
We have taken the prudent decision to have the remedial work conducted while the FPSO remains at the shipyard in Singapore. This minimises the impact to the project schedule as it is safer, more efficient and more cost effective than undertaking the work offshore Senegal. This approach ensures we can achieve production startup in line with the adjusted schedule and ramp up operations as planned. The change in project schedule has no impact on Woodside's production guidance for 2023.
