Woodside Energy sees European winter, Chinese recovery clouding gas price outlook

  • LNG outlook hinges on China, European winter -CEO
  • Q4 revenue jumps 78% on record output
  • Production growth forecast of 4% a year to 2027 intact

MELBOURNE, Jan 25 (Reuters) - Woodside Energy Group Ltd's (WDS.AX) chief executive said European winter temperatures and Chinese economic recovery are among factors clouding the near-term outlook for gas prices, which have dropped from the historic highs of last year.

Australia's biggest independent gas producer on Wednesday posted a 78% jump in fourth-quarter revenue on record output, slightly ahead of analysts' forecasts, benefiting from strong LNG prices and its takeover of BHP Group's (BHP.AX), petroleum assets, completed in June.

That puts the company on track for record profit of around $5.6 billion for 2022, showed estimates of analysts polled by Refinitiv. Forecasts for 2023, however, are for a slight fall in profit on weaker oil and gas prices.

Chief Executive Meg O'Neill said the jury is out on the outlook for liquefied natural gas (LNG) prices in the near term.

"Last year was a really exceptional year in terms of what happened in energy markets globally. The prices that we're seeing today are still well above historic norms," O'Neill said in an interview.

"There's still a lot of uncertainty around, for example, for the rest of the European winter and how cold that's going to be. There's a question around how fast Chinese economic activity and energy demand ramps up."

Revenue for the three months ended Dec. 30 soared to $5.16 billion on record output of 51.6 million barrels of oil equivalent. The company's average realised price jumped 9% to $98 per barrel of oil equivalent from a year earlier.

Woodside remains confident it can start producing gas from its biggest project, the $12 billion Scarborough development and Pluto LNG expansion, in 2026, despite new consultations with Indigenous groups required by the Federal Court in order to receive final environmental approvals.

"Our project teams are very good at adapting to challenges and adjusting activity plans. So at this point in time, the project is still on track," O'Neill told Reuters.

While Woodside has said the government's plans to control gas prices may deter new projects, O'Neill reaffirmed the company's outlook of production growth of 4% a year to 2027, saying it was based on its major projects already underway.

Reporting by Sonali Paul in Melbourne; Additional reporting by Harish Sridharan and Navya Mittal in Bengaluru; Editing by Devika Syamnath and Christopher Cushing

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