Woodside Petroleum has agreed to take a 30 per cent stake in a gas field off the coast of Israel as it seeks to expand its business outside Australia.
Australia's largest oil and gas company will pay a total of $1.2 billion for the stake in the Leviathan field.
Chief executive Peter Coleman says the deal will allow the company to gain a key foothold in a potential liquefied natural gas (LNG) industry in Israel.
"These licenses contain the Leviathan field offshore Israel, one of the biggest recent gas discoveries worldwide with an estimated 17 trillion cubic feet of recoverable natural gas," Mr Coleman said.
Woodside says it will operate any LNG development that results from exploration of the site, while Texas-based Noble Energy, a partner in the joint venture, will operate the overall development.
"Leviathan is truly a world-class field that offers significant development opportunities through the growing Israeli domestic gas market and Asian and European export markets, while also having additional exploration upside," Mr Coleman said.
In a note on the agreement, City Index chief market analyst Peter Esho said the deal was not as risky as it may appear.
"The big prize will be Woodside operating any LNG development," Mr Esho said.
"This will make Woodside one of the most sought-after strategic players in energy markets as Western European nations finally find practical diversification solutions to over-reliance on Russian energy." The deal is subject to approval by governments and regulators, and the completion of due diligence.
Shares in Woodside Petroleum closed nearly one per cent higher today, at $34.11.