ALERT: Impact of Woodside’s North West Shelf project extension approval on Australia’s Safeguard Mechanism

Approval of the North West Shelf project extension

On Friday, an extension to operate until 2070 was formally granted to Woodside for Australia’s largest gas project, the North West Shelf (NWS) by Minister for the Environment and Water, Murray Watt. Notably, this includes cutting gas emissions below their current levels, in some cases by 60% by 2030.

Although NWS’s current gas fields are already in rapid decline, the approval is critical for Woodside’s Browse offshore gas development that plans to use NWS’s Karratha Gas Plant for onshore gas processing and Liquified Natural Gas (LNG) export.

In this alert, we review the impact of Woodside’s North West Shelf project extension approval on Australia’s Safeguard Mechanism.

Current expectations within our Carbon Market Outlook

Within our Carbon Market Outlook (CMO), we currently anticipate LNG production and emissions at NWS to decline over 90 per cent over the next several years, in-line with the deterioration of its historic gas-field production.

This reduction in gas production and emissions is forecast to reverse, however, once Browse commences, currently assumed from FY32, and begins to backfill some of the NWS’s LNG production trains.

We expect Browse’s large gas reserves, continuing demand for Australian LNG, and NWS’s large