Woodside Energy Group Acquires Tellurian Inc. for $900 Million: A Bold Leap into US LNG Sector

Woodside Energy Group Ltd. Makes Bold Move into US LNG with $900 Million Tellurian Acquisition

Australia’s Woodside Energy Group Ltd. has set its sights on the US liquefied natural gas market with a groundbreaking agreement to acquire Tellurian Inc. for a whopping $900 million in cash.

Tellurian, the owner of the proposed multibillion-dollar LNG export terminal known as Driftwood in Louisiana, is a key player in the US LNG industry. The acquisition by Woodside could potentially make the Australian company the second foreign entity to control such a facility, following QatarEnergy’s majority stake in the Golden Pass project.

With Japanese electricity generator Jera Co. and French energy giant TotalEnergies SE already holding minority stakes in other US LNG sites, the trend of foreign investments in the American LNG market seems to be gaining momentum.

As Woodside seeks partners to share the cost of Driftwood, potential contenders include Saudi Aramco, Abu Dhabi’s state oil company, and Woodside’s existing Japanese LNG buyers, according to analyst Saul Kavonic from MST Financial Services Pty.

The appeal of US LNG lies in its flexibility to reach both Asian and European markets, as well as its cost-effectiveness compared to regional prices. Despite market volatility, the arbitrage opportunities in American export capacity can make a significant investment in US LNG worthwhile.

The Driftwood project, which is already fully permitted, offers an advantage to Woodside and other investors, especially as the Biden administration has imposed a moratorium on approving new developments.

A final investment decision on Driftwood is anticipated early next year, with the potential for it to become one of the largest LNG plants in the US if all four phases are completed.

However, challenges such as securing customer contracts, managing costs, and hiring construction workers in a competitive labor market along the Gulf Coast remain hurdles for the construction of an LNG export facility. The struggles faced by projects like Texas’ Golden Pass, plagued by cost overruns and delays, serve as a cautionary tale for potential investors eyeing the US LNG sector.

Despite the promises and potential of US LNG, the industry’s trials and tribulations remain a focal point for serious investors looking to capitalize on the booming market.

– Ruth Liao, Bloomberg News