Arrow Energy accepts $3.2bn bid from Shell-PetroChina JV

22 March 2010 07:29  [Source: ICIS news]

SINGAPORE (ICIS news)--Arrow Energy has accepted an improved Australian dollar (A$) 3.5bn ($3.2bn) bid from a Shell and PetroChina joint venture (JV) for its assets in Australia, the companies said on Monday.

Arrow’s board members had recommended on Monday that its investors accept the bid after Shell and Petrochina raised their offer by 6% to A$4.70/share from the initial offer of A$4.45/share, made in early March.

The JV is a 50:50 partnership between Shell and Petrochina, the two companies said in a joint statement.

The deal would allow the companies to acquire Arrow’s coal seam gas (CSG) assets in Queensland and its domestic power business, the statement added.

Coal seam gas, a naturally occurring gas which has been trapped in coal beds by water and ground pressure, can be extracted by drilling into coal seams and converted into liquefied natural gas (LNG) thereafter.

The deal would allow Arrow’s shareholders to “continue to participate in a portfolio of earlier-stage development assets in Australia and the broader Asian region," Arrow chairman John Reynolds said in a statement to the Australian Stock Exchange (ASE).

The transaction was now awaiting regulatory approval from Australia’s Foreign Investment Review Board, the National Development and Reform Commission of China and China’s State Administration of Foreign Exchange, the statement to the ASE added.

The Shell-PetroChina JV would also own Shell’s Queensland CSG assets and its site for a proposed LNG plant on Curtis Island at Gladstone, the companies said in their joint statement.

“The proposal would create jobs and generate additional economic activity for Queensland through the export of 7 to 8m tonnes/year of LNG from the proposed Curtis Island LNG plant,” said Aiji Ge, a PetroChina project manager.

Malcolm Brinded, executive director of Shell’s international upstream business unit, added: “The new joint venture will be an important growth asset for Shell, and help meet growing demand for cleaner energy in Australia and international markets.”

The Curtis Island plant would be capable of producing up to 16m tonne/year of LNG, Shell had said in an earlier statement on its website.

($1 = A$1.09)

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By: Nurluqman Suratman

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