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Australia is the land of promise for BP and Shell

March 25, 2009

Robert Lindsay

BP edged down 4p to 471¾p and Shell fell 30p to £15.33 amid talk that both were eyeing a $7 billion (£4.8 billion) bid for Santos, Australia’s third-largest energy company.

Santos’s shares have been rising since the Australian Government lifted a limit of 15 per cent on foreign ownership in November. Its market value is now A$9.3 million (£4.4 million). It is seen as a prize because, as well as having coal seam gasfields, it is planning to build a liquefied natural gas (LNG) terminal in Gladstone, Queensland, where it will cool the gas to liquid ready for export by sea.

BP has said that it is looking at buying LNG assets to plug a looming gap in its portfolio. BG Group, down 7p at £10.95, took control of Pure Energy, a rival Queensland LNG group, yesterday after buying 91 per cent of it.

Some analysts believe that the rush by oil majors into coal seam gas assets – natural gas extracted from coal – is creating a bubble and that not all projects will be completed.

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