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"G'day Fools. If you're like us, you're dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So we'll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine."
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Even though it's only around lunchtime, the Woodside Petroleum Limited (ASX: WPL) share price has already had a wild ride so far during today's trading. At present, Woodside shares are down 0.63% at $31.78. But soon after market open, Woodside shares were up, and up convincingly. After opening at a flat $32 a share after closing at $31.98 last week, Woodside quickly rose as high as $32.49 in the first hour or two of today's session. That was a gain close to 1%. But it wasn't to last.
So what on earth is going on here? After all, oil prices have started the week on the rise. As my Fool colleague James covered this morning, oil was up more than 3% overnight, although that was after a week of heavy falls last week. So it could be some deeper issues that investors are having with the global ructions in the energy market that are currently playing out.
According to a report in The Australian today, Woodside CEO Meg O'Neill reckons the spotlight is now on natural gas, particularly in light of the war in Ukraine. Not only have oil prices exploded in recent weeks, largely due to the fallout from the war, but gas prices have followed suit.
Woodside share price falls, but CEO says gas is the future
O'Neill told the Australian that 20-25% of Woodside's LNG (liquified natural gas) production in 2022 will be sold at spot prices, which means the company will benefit well from the rising prices. Unfortunately, she doesn't believe Woodside is in a position to meaningfully make up any shortfalls in the European gas market that have resulted from the sanctions that European nations are placing on Russia: "the transportation costs just make it uneconomic".
However, she is more excited about the role Woodside can play in helping wean Japan off Russian gas. Japan, the third-largest economy in the world, reportedly "buys between 20 and 25 per cent of Russia's LNG exports". Here's what O'Neill had to say about that opportunity:
What the Japanese do in the short term is a little hard for me to say. Long term, I think Japan will be looking to the question of where should they get their energy from and they will be leaning more towards countries like Australia.
Even though Woodside shares have had a tough day today, the ASX 200 energy giant is still up almost 40% in 2022 so far.
At the current Woodside share price, the oil company has a market capitalisation of $31.01 billion, with a dividend yield of 5.85%.
