Activists target Scarborough project as Woodside Petroleum faces scrutiny over CEO handover

An international think tank claims Woodside Petroleum is not being upfront with investors about the risks of developing its $16 billion Scarborough as project as the company prepares to resume hostilities with climate change activists at today’s annual meeting in Perth. The US-based Institute for Energy Economics and Financial Analysis said Woodside was keeping shareholders “in the dark” about the financial implications of Scarborough’s carbon emissions, despite rising global pressure on oil and gas companies to map out their transition to cleaner energy. An IEEFA analysis on the remote offshore WA project also suggests Scarborough’s LNG will be priced out of the market by cheaper and greener gas projects planned by Qatar. “This increasing competition from Qatar puts even greater pressure on the economics of the Scarborough gas field and Pluto LNG expansion,” author Bruce Robertson said yesterday. “Woodside is keeping its investors in the dark regarding the financial effects of its greenhouse emissions,” Mr Robertson said. “Relying on carbon offsets alone to meet emission reductions goals is a highly risky and unproven strategy.” Woodside rejected the IEEFA’s contentions, saying “Scarborough is a globally competitive project that is located close to core Asian markets and crucially is a resource with a low emissions intensity and very low, near zero CO2 in the reservoir”. “Woodside is seeing strong interest from customers for Scarborough gas and has already contracted half of our expected equity offtake,” it said. However, the IEEFA analysis backs activists opposed to Scarborough and Woodside’s oil and gas operations who have again co-ordinated action around the annual meeting, with a protest planned outside the company’s city headquarters and the board facing a grilling later from proxyholders. Woodside chairman Richard Goyder is also facing questions about the sudden about-face which sees chief executive Peter Coleman leaving early and the leading internal candidate for his job, development and marketing boss Meg O’Neill, temporarily taking the company’s reins from next week. The plan on announcing Mr Coleman’s planned retirement four months ago was that he would leave in the second half of 2021. Instead, he will now step down from the board on April 19 and leave Woodside on June 3. The sudden change of plans has triggered speculation about a relationship breakdown with the Woodside board and raised questions about its CEO search. “Given the timing and optics of this, one cannot help but consider its may indicate a scenario of a potentially discordant relationship between the Woodside board and Peter Coleman,” Credit Suisse oil and gas analyst Saul Kavonic said. “The market does not like such messy management churn situations,” Mr Kavonic said, adding it could comprise the company’s ability to make key decisions. “Clearly, the faster leadership certainty, and hence decision-making credibility, is achieved, the better.” Mr Coleman will leave the group with stock potentially worth more than $25 million, including an award of performance rights due to go to a shareholder vote today. The former Victorian has accumulated nearly $13.9 million of Woodside shares over his 10 years with the company. However, the upside is in the near 418,000 of equity rights he has been granted through Woodside’s executive bonus schemes as part of his $8 million annual pay packet. With Woodside shares closing at $24.16 yesterday, the performance-linked stock would be worth about $10m if fully vested. Woodside is seeking shareholder approval at the annual meeting to grant Mr Coleman 118,000 performance rights as part of his 2020 pay.