We believe Woodside Energy Group Ltd. 's final investment decision (FID) on the Louisiana liquefied natural gas (LLNG) project will erode rating headroom at the 'BBB+' rating level, ahead of a planned sell-down of the project holding company and the securing of third-party offtake agreements for the project. We expect Woodside's ratio of funds from operations (FFO) to debt to track at about 50% over the next few years. The additional market risk under the project from Woodside's current LLNG offtake commitments introduces more inherent volatility into Woodside's business. Moreover, during the elevated capital expenditure (capex) program over the next few years there is limited headroom to absorb weaker oil prices or project cost escalations at the current rating level.
