Shell moves on Australia’s coal seam gas market in $700m deal
By Russell Hotten, Industry Editor
Royal Dutch Shell has signed a $700m (£356m) deal to buy a stake in Australia’s Arrow Energy to jointly produce natural gas from coal deposits.
Australia’s Origin Energy rejected BG’s £6.5bn revised offer |
The deal, coming as Britain’s BG Group weighs up a move into Australia’s coal seam gas market (CSG), will see Shell and Arrow working to also exploit deposits in China, Indonesia, Vietnam and India.
Interest in Australia’s CSG market has been strong recently, with Malaysia’s Petronas agreeing to invest $2.5bn in a liquefied natural gas project run by Santos at a coal seam gas reserve in Queensland, in north-eastern Australia.
Last week BG had a £6.5bn revised offer for Origin Energy rejected after the Australian company said the Santos deal meant the value of its own assets should be re-rated.
Under the Shell deal, the Anglo-Dutch company will acquire a 30pc interest in Arrow’s CSG acreage in Queensland and a 10pc stake in Arrow International. Shell also has a five-year option to acquire up to 50pc of individual Arrow International projects, including those in China.
Meanwhile, UBS analysts said in a note that they do not believe BG will raise its offer significantly. It is possible, they said, that BG will either walk away, or go directly to shareholders with a hostile bid. BG shares closed down almost 2pc to £12.42 yesterday on continuing concerns that the company might overpay for Origin.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/03/cnshell103.xml
This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.