Higher prices amid global energy crisis offset wild weather impacts for Woodside Energy in first quarter

Australia’s biggest undeveloped gas project has been given a small boost with Woodside Energy launching early engineering work on the $30 billion Browse proposal. The elevated oil price and global concern about energy security may be enough to put a tailwind behind the project, which has been on and off for more than five decades. Woodside hopes to pipe the gas nearly 1000km from north of the Kimberley coast down to Karratha, which will require a processing deal with the North West Shelf partners. In quarterly results on Wednesday, the Perth-based energy giant said contractors had been picked to work on pre-front end engineering and design for a floating production platform. Woodside also launched a tender for design and construction work. It’s still too early to confirm when Woodside will enter full engineering or make a final investment decision. The $60 billion company recently warned that a mooted 25 per cent levy on LNG would make Browse unviable but received good news from Prime Minister Anthony Albanese on Wednesday that such a tax was off the agenda. Browse’s modest economics have made previous plans to develop the field a challenge, including at James Price Point and as a floating LNG plant. Newly-minted chief executive Liz Westcott on Wednesday said the project would “tick many boxes”, including as a potential crude oil supplier because the fields were “rich” in oil alongside gas. While not setting a clear timeline for investment, she told The West Australian the company would be trying to progress the project this year. “It’s a fabulous resource. It’s Australia’s largest not-yet-producing resource,” Ms Westcott said. She said the Middle East war was a reminder of how many products were made using petroleum and the importance of Australia’s relationships with trading partners. Developed countries have been scrambling to shore up supply after the war took out a major trading route in the Strait of Hormuz. But Ms Westcott ruled out her company building an oil refinery in Australia — as it is outside Woodside’s business model. Her comments came as war in the Middle East boosted revenue — with further upside set to supercharge earnings in coming quarters — despite wild weather in WA’s North West crimping production. Australia’s biggest energy producer delivered 45.2 million barrels of oil equivalent in the first three months of 2026, down 8 per cent on the final quarter of the previous year. Woodside’s giant Karratha gas export plant was forced offline after a major outage caused by severe tropical cyclone Narelle in March, while Mitchell also affected onshore and offshore operations in February. But prices were driven higher by the closure of the Strait of Hormuz in the Middle East — which transits about 20 per cent of global oil and LNG supply — after the US and Israel launched attacks on Iran in late February more than offset the financial blow from the fall. Average realised prices in the first quarter jumped 11 per cent from the previous three-month period to $US63/boe as international oil benchmark Brent and European gas jumped more than 70 per cent in the period. Operating revenue leapt 7 per cent to $US3.26 billion ($4.54b). Analysts at Ord Minnett said the result beat consensus by 8 per cent, driven by stronger-than-expected volumes largely from inventory drawdowns and higher third‑party sales, albeit at lower margins. “We have seen modest increases to our portfolio average realised pricing in the quarter, driven by elevated spot prices,” Ms Westcott said. “Further benefits of currently higher spot prices will be realised in subsequent quarters for LNG due to lagged contract pricing.” Most LNG is sold under long-term contracts, often linked to the price of oil with a three to six-month delay. That has intensified competition among buyers that are rebuilding inventories after the peak northern hemisphere winter season for limited spare cargoes from exporters such as Woodside and rival Santos. The market tightness has lifted stocks in Australia’s LNG-heavy energy export sector, which posted a record first quarter. Woodside also benefited from plant efficiencies, with its Sangomar, Shenzi, North West Shelf Project and Pluto LNG operations all delivering reliability at or above 99 per cent during the period. Woodside maintained full-year guidance of between 172 and 186mmboe. The company said there had been no disruptions to its trading activities as a result of the conflict in the Middle East, with shipping operations continuing as planned. It added it did not currently have any controlled shipping that traverses Iranian waters or the Straits of Hormuz and its trade routes were not subject to increased security risk. As Woodside closes in on completion of its $US12.5b Scarborough project and first production later this year, Ms Westcott said the company would prioritise organisation efficiency and improve capital management as the business looks to balance growth spending with shareholders returns. “Cost discipline is essential to sustained shareholder value creation and we are commencing a structured review of our business to streamline decision making, reduce complexity and improve accountability,” she said.