Australia’s Woodside Energy WDS gave final approval to build a $17.5 billion liquefied natural gas project in Louisiana, confident a pro-fossil fuel U.S. administration and strong demand will give it competitive returns.

The company’s decision, announced on Monday, marks the first financial go-ahead to construct an LNG plant in the U.S. since President Donald Trump returned to office declaring an energy emergency and promising to unleash U.S. energy onto the world.

Chief Executive Officer Meg O’Neill said Trump’s desire for “American energy dominance” boded well for the project, slated to deliver first gas in 2029, and the imposition of tariffs could even work to Woodside’s advantage.

“The tariffs complicate things and create volatility. But in some ways, that gives us an edge,” she told Reuters, citing the project’s headstart against other proposed U.S. plants, a fixed-price contract with construction firm Bechtel, and the fact all purchase orders for long lead items had already been issued.

“Those costs are locked in … We’re able to take a (final investment decision) and other projects will probably be doing a bit of a recycle.”

The project also has the advantage of being in a foreign trade zone, which gives it relief on some customs duties. Construction would mostly involve U.S.-based contractors, workers and services, O’Neill said, while around half of the equipment and materials would be sourced in the U.S.

Woodside said Louisiana LNG would help it produce around 24 million tonnes per annum (Mtpa) from its worldwide LNG portfolio in the next decade, making up over 5% of global supply, to service demand in Europe and Asia.

The project is expected to generate $2 billion in annual net operating cash in the 2030s, offering an internal rate of return of 13% and a payback period of seven years.

“The project benefits from access to abundant low-cost gas resources in the United States and boasts an asset lifespan of more than 40 years,” O’Neill said.

Louisiana governor Jeff Landry said the project was the biggest single foreign direct investment in his state’s history.

“We are working with President Trump to deliver on America’s energy potential,” he said.

Stonepeak, which has taken a 40% stake in the project’s infrastructure arm, will contribute $5.7 billion towards the expected capital cost.

O’Neill said Woodside was on an “aggressive” timeline to bring partners to further reduce its equity in the project.

Analysts have estimated a further 20%-30% sale of its holding company stake would be needed to achieve its 50% selldown target, which they see as crucial to reduce the risks it faces with the huge project.

Woodside’s shares rose 1.2% after the announcement but underperformed the broader energy subindex XEJ, up 2.4%.

O’Neill said the final go-ahead for Louisiana LNG further de-risks the project for potential partners, declining to comment on whether Woodside was talking to Kuwait Petroleum.

“The ship is sailing. It’s now time for you to write your cheque and get your seat on the ship because there are others knocking at the door,” she said.

Source: Reuters