Royal Dutch Shell Plc  .com Rotating Header Image

Shell Australia chairman Andrew Smith says LNG needed to develop Arrow gas

Screen Shot 2015-11-12 at 10.09.08

Screen Shot 2015-11-12 at 10.10.54

Screen Shot 2015-10-31 at 15.47.13

By Energy Reporter: Angela Macdonald-Smith: 12 Nov 2015

Shell Australia chairman Andrew Smith has insisted there are no issues of competition raised in eastern Australia with the oil giant’s planned $US70 billion ($98 billion) takeover of BG Group and that letting the deal proceed is the best way of ensuring the company’s undeveloped gas resources in Queensland reach buyers.

“What this market needs is more gas to be developed into the market,” Mr Smith said.

“By approving the combination that will allow for the earliest introduction of Arrow’s resource base into the east coast market,” he said, without pre-empting the November 19 decision due on the deal from the Australian Competition and Consumer Commission, which voiced reservations about it in September.

Australia’s approval for the deal is the key outstanding clearance required worldwide, along with China’s.

The takeover would align the Arrow gas venture in Queensland owned equally by Shell and PetroChina more closely with BG Group’s Queensland Curtis LNG venture, which exports gas from a huge new terminal in Gladstone.

It has raised worries among industrial gas buyers that are already facing higher prices for gas on the east coast that they will face even higher prices and could be left short of energy as Arrow gas would also be sent overseas.

But Mr Smith said LNG was still needed to develop Arrow gas because the small size of the domestic east coast market meant it didn’t have the scale necessary to underpin the investment required.

“It is only through supplying LNG trains that you can get the scale of development to open up some of these areas and address the cost challenges,” he said.

Mr Smith pointed to “compelling industrial logic” in enabling both Arrow and QGC to access existing gas pipelines and processing plants, and said that was particularly important in a cost-challenged environment amid low oil prices.

Gas buyers have suggested the ACCC may consider requiring Shell to sell its stake in Arrow or to divest from certain gas tenements in Queensland. But Mr Smith gave no indication that Shell had offered any such concessions.

At the same time he said Shell understood that to get community acceptance for the large LNG export industry in Gladstone domestic customers needed reliable and competitive supplies. The wholesale price for that gas would need to meet the marginal costs of supply, he added.

Shell has been working to find an economic way of developing Arrow gas since acquiring Arrow Energy with PetroChina for $3.5 billion in 2010 and ditched original plans to build a standalone LNG project last year.


This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Comment Rules

  • Please show respect to the opinions of others no matter how seemingly far-fetched.
  • Abusive, foul language, and/or divisive comments may be deleted without notice.
  • Each blog member is allowed limited comments, as displayed above the comment box.
  • Comments must be limited to the number of words displayed above the comment box.
  • Please limit one comment after any comment posted per post.