“This is the right kind of M&A Woodside should be pursuing,” he said. “It is leveraging Woodside’s LNG expertise to access financially distressed yet otherwise advantaged LNG assets at good price, which Woodside can add real value to.”

Woodside shares closed the session 2.1 per cent weaker at $28.60.

The takeover would help position Woodside as one of the “largest and purest” LNG exposures in the market, Kavonic added, as other key LNG producers held a swath of oil, downstream businesses and other assets.

However, it also comes less than three months after Woodside investors staged a historic uprising against the company’s approach to climate change, with 58 per cent of its shareholder rejecting its decarbonisation strategies as inadequate.

Large Woodside investors across Australia, Europe and the United Kingdom have been criticising the company’s climate targets as too weak and growing increasingly concerned about the risks involved in developing new fossil fuel production projects at a time of accelerating international efforts to restrain rising global temperatures.

Loading

The Australasian Centre for Corporate Responsibility, an activist group, said Woodside’s Tellurian deal showed it was “thumbing its nose” at concerns about its management of climate risk.

“This adds to concerns about Woodside’s board’s ability to think creatively about strategy,” the group’s Alex Hillman said. “Investors expect a board that can do more than just pursuing marginal fossil fuel projects.”

As debate continues about the role of gas in the world’s transition to cleaner energy, Woodside and other LNG players point to projections that it will remain an indispensable part of the global energy mix, particularly as a “transition” fuel that is less emitting than coal but one that can still be used as a back-up to renewable energy sources.

O’Neill on Monday pointed to base-case forecasts from Wood Mackenzie that LNG demand would grow 53 per cent by 2033.

Loading

The fuel’s longer-term outlook, however, is less certain and may vary significantly depending on how aggressively countries decide to ratchet up ambitions to slash greenhouse gas emissions. Modelling from the International Energy Agency in 2021 found no new oil and gas fields could be developed for the world to achieve the Paris Agreement’s ultimate goal of limiting warming to 1.5 degrees.

Woodside on Monday said Tellurian’s proposed Driftwood LNG project had valid non-free trade agreement export authorisation and was not affected by US president Joe Biden’s pause on new LNG export approvals.

The energy giant is aiming to give the financial go-ahead to construct the first phase of the project, with a capacity of 11 million tonnes of LNG a year, by early 2025.

On a conference call on Monday, analysts asked whether Woodside was worried a second Trump presidency may push to lift US LNG exports and worsen the risk of a global oversupply.

O’Neill said new LNG projects would still face “long and complex” permitting processes, even if a future administration pushed to accelerate supplies.

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