NEWS.com.au (Australia): Shell lusts for Woodside

By Andrew Trounson and Scott Murdoch

June 20, 2007 12:00am: Oil giant Shell may make another grab for Woodside: Woodside shares jump on the takeover talk

ROYAL Dutch Shell is believed to be testing the political waters before launching another tilt at Woodside Petroleum, after rumours hit the market that the Anglo-Dutch oil giant has Woodside on its radar again.

In 2001, Treasurer Peter Costello cited national interest when he vetoed Shell’s hostile $10 billion bid to take control of Woodside, in which it has a 34 per cent stake.

But with an election expected before year’s end, Shell is believed to be considering trying again.

Shell might believe it can persuade Mr Costello to change his mind once the election is behind him, or win over a new treasurer in the form of Labor’s Wayne Swan.

Woodside shares yesterday rose 90c, or 2 per cent, to a new 12-month high at $46.85. They have now rallied almost 10 per cent since speculation that Woodside was a target emerged from London late last week.

In early London trade last night, shares in Shell were trading up nearly 0.5 per cent on the back of the speculation.

No official offers

Treasury in Canberra was understood last night not to have received any official approaches about Shell again testing the waters.

The Treasurer’s office said the rumours, which gained strong traction in the trading session yesterday, were the first it had heard of the news.

Mr Costello holds ultimate control of the Foreign Investment Review Board, which rejected the initial approach by Shell to gain full control.

The Government would be keen to avoid any corporate scandal in the lead-up to the election, having already battled Telstra and the fallout over the collapsed Qantas private equity deal.

Its management of the economy is seen as the number one platform of the Government’s bid for the election, meaning it would want a smooth campaign.

Shell not commenting

A Shell spokesman in London last night said it too had been made aware of the second-guessing which drove Woodside shares higher. “I have heard the rumours but we don’t comment on merger and acquisition speculation,” the spokesman said.

Since the first decision by the FIRB, Woodside has repaid the Government’s faith by expanding the North West Shelf liquefied natural gas project, and it is also proposing to spend $10 billion on its Pluto LNG project offshore from WA.

The share market now values Woodside at almost $32 billion, more than three times Shell’s 2001 offer.

A key driver for Shell would be securing for itself Woodside’s rising LNG growth profile in a market in which Asian LNG demand is on the rise.

Shell’s Asia-Pacific growth plans were crimped last year when Russia forced it to cede control of its Sakhalin-II LNG project on Sakhalin Island bordering the Pacific.

Mr Costello blocked Shell’s bid because he was concerned that Shell might pursue gas projects offshore at the expense of domestic expansion.

UK broker Cazenove has speculated that BG (British Gas) Group might bid for Woodside with Shell’s support.

Industry publication LNG Intelligence yesterday became the latest to report that Shell might be considering bidding for Woodside, following a Dow Jones report that the oil giant was planning a post-election bid.

“It (a Shell bid) is entirely logical,” Morgan Stanley’s oil analyst in Melbourne, Stuart Baker, told The Australian.

“It is the only proposition that makes any sense.”

In the past Woodside has been touted as a target for China’s CNOOC and global miner BHP Billiton.

http://www.news.com.au/business/story/0,23636,21936782-462,00.html

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