Woodside’s acquisition of Tellurian highlights the appeal of exporting American natural gas.

Tug boats alongside a liquefied natural gas tanker at the Cheniere Sabine Pass Liquefaction facility in Cameron, Louisiana. Photographer: Mark Felix/Bloomberg

Australia’s Woodside Energy Group Ltd. made a bold leap into US liquefied natural gas with its agreement to acquire Tellurian Inc. for $900 million in cash.

Tellurian owns Driftwood, a proposed multibillion-dollar LNG export terminal in Louisiana. The takeover could make Woodside the second foreign entity to control such a facility after QatarEnergy, which holds a majority stake in the Golden Pass project.

Japanese electricity generator Jera Co. and French energy giant TotalEnergies SE hold minority stakes in other US sites.

The trend toward foreign investments is likely to continue as Woodside looks for partners to help it bear the cost of Driftwood. Saudi Aramco could be among those it courts as the petrostate looks to expand internationally.

Abu Dhabi’s state oil company and Woodside’s existing Japanese LNG buyers also may be contenders, said Saul Kavonic, an analyst at MST Financial Services Pty.

The primary attractions of US LNG are the flexibility to ship to either Asia or Europe, and its cheapness compared with prices in those regions. Despite the market volatility, the arbitrage opportunities can make a huge investment in American export capacity worthwhile.

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Woodside Energy AGM as Investors Revolt on Climate — Meg O’Neill, chief executive officer of Woodside Energy Group Ltd., says the Tellurian deal could make her company a “global LNG powerhouse.”Photographer: Philip Gostelow/Bloomberg

The Driftwood project also offers Woodside and other prospective investors the advantage of being fully permitted while the Biden administration has placed a moratorium on approving other developments.

A final investment decision on Driftwood is expected by early next year. If all four phases are built, it could be one of the largest such plants in the US.

Still, big challenges lie in store for any effort to construct an LNG export facility. It will have to secure customer contracts, keep a lid on costs and hire construction workers at a time when the availability of skilled labor is stretched thin by expansion along the Gulf Coast.

A case in point is Texas’ Golden Pass, in which QatarEnergy holds a 70% stake and Exxon Mobil Corp. the rest. The project near the Louisiana border has suffered cost overruns and multiple delays as lead contractor Zachry Holdings Inc. filed for bankruptcy in May.

For all the promises of US LNG, the trials and tribulations of that project won’t escape the attention of any serious potential investor.

—Ruth Liao, Bloomberg News