Woodside (ASX:WPL) share price slips but CEO says Ukraine puts ‘spotlight’ on natural gas

Woodside shares have had a wild start to the week…

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Key points

  • The ASX 200 has had a great start to the week so far on Monday 
  • But Woodside shares have been on a volatile rise, despite oil prices climbing overnight 
  • What's causing such volatility in energy shares like Woodside? 

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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%.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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