A Woodside shareholder vote on the BHP deal, which will give the miner 48 per cent of the merged entity, is planned for 19 May to allow the transaction to be completed in early June.

Analysts have speculated the merger could hurt Woodside’s share price, with BHP shareholders not keen on their new investment selling out.

But Ms O’Neill said that “nothing has come to light that would change our view that we expect any selling will be balanced by new buying”. She pointed to the need of index funds to adjust their portfolios to the doubling of Woodside’s market value and expectations of strong international demand for the shares, especially from the US.

In her first full year as Woodside’s CEO, Ms O’Neill will have to deal with a tumultuous LNG market while she integrates the new BHP assets and its workers.

“In 2020, [the LNG market] was a bit of a challenge for us because those prices dropped quite low, but in 2021 it’s been pretty attractive,” she said.

Loading

The spot price for LNG almost quadrupled during 2021, with enormous spikes in February and November. Woodside predicts the portion of its sales exposed to the spot market and price indices will increase from 16 per cent in 2021 to as much as 25 per cent in 2022.

“I think volatility will be the word of the year for 2022, just as it was for 2021,” she said.

While the price for Woodside’s core product is unpredictable in the short term, for the new world of hydrogen it wants its customers to provide long-term volume and price certainty, just as Japanese power utilities did in the 1980s for the company’s first foray into LNG, the North West Shelf.

’We’re not going to be risking billions of dollars of shareholder capital without confidence that our product has a viable market and that those investments will pay off,” Ms O’Neill added.

Ms O’Neill wants Woodside’s early hydrogen projects to comfortably beat the minimum 10 per cent rate of return threshold set in December 2021 for “new energy” projects.

Not interested in highly competitive and low-return wind and solar power generation, the company is looking to purchase renewable power to make green hydrogen.

“We think where we can bring a competitive advantage...is in those manufacturing facilities that produce hazardous chemicals like ammonia and liquid hydrogen, so that’s where we focus,” she said.

Woodside failed with its plans to about halve its 82 per cent interest in the $US4.6 billion Sangomar oil development in Senegal last year, but Ms O’Neill appears comfortable to wait while oil prices are high.

“We need to make sure we bring in the right partner for the right price,” she said. “We’re not going to be rushed because again we do have the strength of the balance sheet to continue to carry the investment 82 per cent.”

Woodside shares closed the session 4.1 per cent stronger at $27.72.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.