Woodside Energy Group Ltd (ASX: WDS) shares, classified as an ASX Energy stock, are on an upward trajectory. This reflects the company's strategic push to strengthen its position in the liquefied natural gas (LNG) market, with a specific focus on Mexico. This move is integral to Woodside's broader strategy, aligning with the dynamic shifts in the global energy landscape.

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Market Performance of Woodside Shares

Woodside Energy Group's shares, part of the S&P/ASX 200 Index (ASX: XJO), exhibited a positive trend, closing at $29.53 in the previous session and showing a slight increase to $29.59 in late morning trade on Wednesday—a modest 0.2% gain. While this trails the 0.8% gains of the ASX 200, it aligns with the 0.2% gains posted by the S&P/ASX 200 Energy Index (ASX: XEJ).

The energy sector's performance is influenced by a 1.1% overnight decline in the Brent crude oil price, reaching US$77.20 per barrel, as skepticism arises regarding the voluntary nature of recent OPEC+ production cut pledges.

Woodside's Strategic Move in Mexico

Woodside Energy Group has announced a significant step in expanding its presence in Mexico by signing a sales and purchase agreement with Mexico Pacific. This agreement entails the purchase of 1.3 million tonnes per annum (Mtpa) of LNG for a duration of 20 years. This equates to around 18 cargoes annually.

Woodside recognizes the pivotal role of gas in the ongoing global energy transition and anticipates sustained demand for LNG in the long term. CEO Meg O'Neill emphasized the company's strategy to enhance portfolio flexibility and serve customers by complementing its produced LNG supply with third-party volumes.

O'Neill stated, "This agreement with Mexico Pacific delivers a new source of LNG into our trading portfolio, expands our geographic diversification in the Pacific Basin, and builds on our presence in Mexico."

The Saguaro Energia LNG Project

The LNG supply under this agreement will be sourced from Mexico Pacific's Saguaro Energia LNG Project, strategically located on the Pacific coast of Mexico. This positioning holds promise for Woodside in terms of proximity to key Asian markets, aligning with the company's efforts to strengthen its global presence.

The sales and purchase agreement is contingent on Mexico Pacific's final investment decision (FID) on the proposed third train at Saguaro Energia. The FID is anticipated in the first half of 2024, with commercial operations slated to commence in 2029.

Woodside's Market Performance and Outlook

Woodside shares have faced headwinds amid the broader retracement in oil and gas prices since late September, resulting in a year-to-date decline of 16% for the ASX 200 energy stock. However, this strategic move into the Mexican LNG market positions Woodside favorably to navigate market dynamics and capitalize on the anticipated growth in global LNG demand.

In conclusion, Woodside Energy Group's expansion in Mexico reflects a proactive stance in adapting to evolving energy trends. As the company continues to navigate market fluctuations, this move underscores its commitment to strategic diversification and geographic expansion.