Shell, Australia's Arrow sign deal on coal seam gas
Global energy giant Shell said on Monday it had signed a 700-million-US-dollar deal to acquire a stake in Australia's Arrow Energy Ltd to jointly produce natural gas from coal deposits.
By Agencies |
SYDNEY: Global energy giant Shell said on Monday it had signed a 700-million-US-dollar deal to acquire a stake in Australia's Arrow Energy Ltd to jointly produce natural gas from coal deposits.
Shell Exploration Company, a subsidiary of Royal Dutch Shell Plc, said under the preliminary agreement the companies would work together to extract gas from deposits in Australia, China, Indonesia, Vietnam and India.
Arrow Energy is Australia's largest holder of coal seam gas (CSG) acreage and has CSG production facilities in Queensland in the country's northeast.
"This proposed alliance between Shell and Arrow would combine the complementary strengths of our two companies," said Chris Gunner, chief operating officer for Shell Development (Australia) Pty. Ltd., in a statement.
"Shell has global gas marketing and financial strengths coupled with leading research capabilities. Arrow has proven CSG expertise, and extensive Australian and international CSG acreage positions."
Interest in coal seam gas deposits has been intense of late. Malaysia's Petronas Gas Bhd last week agreeing to invest 2.5 billion dollars in a liquefied natural gas (LNG) project based on Australian company Santos' coal seam gas reserves in Queensland.
Arrow's chief executive Nick Davies said the deal with Shell, which he described as "the most significant milestone" in Arrow's history, was in line with current market valuations for CSG projects.
"On that metric we are definitely comparable with recent deals that have been done," Davies told reporters.
Under the deal, Shell will acquire a 30 per cent interest in Arrow's CSG acreage in Queensland and a 10 per cent stake in Arrow International.
Shell also has a five-year option to acquire up to 50 per cent of individual Arrow International projects, including those in China.
Shell will also acquire the right to negotiate an agreement to purchase any liquefied natural gas that may potentially be produced from the CSG operations.
Shell Exploration Company, a subsidiary of Royal Dutch Shell Plc, said under the preliminary agreement the companies would work together to extract gas from deposits in Australia, China, Indonesia, Vietnam and India.
Arrow Energy is Australia's largest holder of coal seam gas (CSG) acreage and has CSG production facilities in Queensland in the country's northeast.
"This proposed alliance between Shell and Arrow would combine the complementary strengths of our two companies," said Chris Gunner, chief operating officer for Shell Development (Australia) Pty. Ltd., in a statement.
"Shell has global gas marketing and financial strengths coupled with leading research capabilities. Arrow has proven CSG expertise, and extensive Australian and international CSG acreage positions."
Interest in coal seam gas deposits has been intense of late. Malaysia's Petronas Gas Bhd last week agreeing to invest 2.5 billion dollars in a liquefied natural gas (LNG) project based on Australian company Santos' coal seam gas reserves in Queensland.
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Arrow's chief executive Nick Davies said the deal with Shell, which he described as "the most significant milestone" in Arrow's history, was in line with current market valuations for CSG projects.
"On that metric we are definitely comparable with recent deals that have been done," Davies told reporters.
Under the deal, Shell will acquire a 30 per cent interest in Arrow's CSG acreage in Queensland and a 10 per cent stake in Arrow International.
Shell also has a five-year option to acquire up to 50 per cent of individual Arrow International projects, including those in China.
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Shell will also acquire the right to negotiate an agreement to purchase any liquefied natural gas that may potentially be produced from the CSG operations.
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