Investors have applauded Woodside Petroleum for taking what they see as the only feasible path with a brutal decision to put $53 billion of LNG growth projects in Western Australia on ice in response to the oil price crash.
The deferral of the Scarborough, Pluto-2 and Browse projects represents a turnaround from Woodside's previous determination to press ahead. But it comes after an unprecedented drop in oil prices which has combined with the demand shock from COVID-19 to wreck investment plans across the global industry.
"These are extraordinary and challenging times for us, and a few months ago no-one could really have foreseen these circumstances," chief executive Peter Coleman told investors as he advised of a 60 per cent cut to investment spending this year and a 50 per cent drop in total spending to $US2.4 billion ($3.94 billion).
Woodside's proposed Pluto LNG expansion using gas from the Scarborough field has been shelved due to the oil price crash. Woodside Petroleum
The news of the deferral of the huge projects, which would employ thousands during construction, capped a horror two weeks for the domestic oil and gas sector, which has seen more than 500 contract workers laid off at Woodside-run offshore and onshore gas plants in WA, as well as axed investment plans by Santos and Oil Search.
Also on Friday, Beach Energy advised of a 30 per cent cut in its investment budget for 2020-21, while Incitec Pivot and Central Petroleum halted work on a gas project in Queensland and Origin Energy interrupted its Beetaloo unconventional gas drilling project in the Northern Territory.