Woodside (WDS.US) alerts of downward pressure on LNG prices and insists that demand growth is resilient.

Australian largest liquefied natural gas (LNG) producer Woodside (WDS.US) said that although the global LNG market is expected to see an oversupply, potentially putting pressure on prices, demand growth remains strong and the uncertainty of new supply cannot be ignored. "New supply may bring downward pressure on prices," Woodside's acting CEO Liz Westcott said in an interview on Tuesday. However, she emphasized, "Caution should be exercised against expectations of sustained or structurally disruptive oversupply." Both the International Energy Agency (IEA) and BloombergNEF predict that due to the start-up of new LNG plants in North America and the Middle East, the global market could enter oversupply as early as this year. Woodside's former CEO, Meg O'Neill, who left the company in December to join BP p.l.c. Sponsored ADR (BP.US), had been advocating for capacity expansion during her tenure, aiming to nearly double the company's liquefaction capacity by 2032. Westcott pointed out that despite an increase in global production, over 50 countries currently have LNG import capabilities, and market liquidity continues to grow. Additionally, some high-cost projects have been abandoned. This includes an LNG export project in Louisiana, USA, which was abruptly halted at the end of last year by Energy Transfer LP (ET.US). "The supply landscape is in a constant state of change," Westcott said, stating that with cost competitiveness, geographical advantages, and mature marketing capabilities, Woodside is well positioned to weather industry cyclicality. Woodside itself is currently evaluating the potential construction of the fourth and fifth liquefaction production lines at its Louisiana LNG project in the United States and plans to sell a further 20% stake in the large plant. The company's financial report released earlier on Tuesday showed that annual net profit declined due to the decrease in oil and gas prices; however, the increase in production to a historic high partially offset the impact of price declines on revenue. As of December 31st last year, the company's annual net profit fell by 24% to $2.7 billion, but this was higher than the market's expected $2.54 billion. Oil and gas production increased by over 6% year-on-year, reaching a record 198.8 million barrels of oil equivalent. This partially offset the impact of a 5% decrease in average realized prices to $60 per barrel of oil equivalent. Production growth was mainly due to the start-up of the Beaumont synthetic ammonia plant in Texas last year and the final investment decision on the Louisiana LNG project - with the first shipment expected in 2029. Additionally, the Australian Scarborough project is 94% complete and is expected to deliver the first batch of LNG in the fourth quarter as planned; the Mexican Trion oil field project is also expected to achieve first oil production by 2028. Furthermore, the Australian company announced a final dividend of 59 cents per share, compared to 53 cents in the same period last year. Boosted by the performance news, Woodside's stock price rose by over 2% on Tuesday, reaching its highest level in 18 months.