The Woodside Petroleum Limited (ASX: WPL) share price is pushing higher on Tuesday morning.
At the time of writing the energy producer's shares are up 1% to $35.10.
Why is the Woodside Petroleum share price pushing higher?
Investors have been buying Woodside Petroleum's shares this morning after it announced a new supply agreement.
According to the release, Woodside Energy Trading Singapore has entered into a long-term sale and purchase agreement with Uniper Global Commodities. This agreement is for the supply of LNG from Woodside's global portfolio for a term of 13 years commencing in 2021.
The quantity of LNG to be supplied under the sale and purchase agreement will initially be up to 0.5 million tonnes per annum (Mtpa). This will then increase to approximately 1 Mtpa from 2025.
Though, supply from 2025 is conditional upon a final investment decision on the Scarborough development.
What is the Scarborough development?
The Scarborough gas resource is located approximately 375 kilometres west-north-west off the Burrup Peninsula in the Carnarvon Basin.
It is part of the Greater Scarborough gas fields, estimated to hold 13 Tcf of dry gas. These gas fields include Thebe (1.4 Tcf), Jupiter (0.5 Tcf) and Scarborough (11.1 Tcf).
Woodside is proposing to initially develop the 11.1 Tcf Scarborough resource with seven subsea, high-rate gas wells. These will be tied back to a semi-submersible floating production unit moored in 900 metres of water close to the Scarborough field.
Gas produced from the operation would then be transported by an approximately 435-kilometre pipeline to existing LNG infrastructure on the Burrup Peninsula.
Mining giant BHP Group Ltd (ASX: BHP) is a partner of the Scarborough gas resource, with a 25% interest.
'Huge potential'.
Woodside's CEO, Peter Coleman, recently spoke very positively about the asset.
He said: "Our understanding of the value of the Scarborough gas resource has increased after applying leading-edge technology to geophysical data collected since the field's discovery almost 40 years ago."
"By unlocking the huge potential of the Scarborough gas resource we've strengthened the case for development and extended the expected cashflow from Scarborough for years. This resource upgrade further improves Scarborough's existing value proposition as we target the delivery of a new, globally competitive LNG project from 2024," he added.
