Australian Financial Review: Arrow Energy nears deal with Santos’ GLNG venture

Royal Dutch Shell’s $3 billion sale of part of its stake in Woodside Petroleum has refocused attention on the fate of its Arrow Energy coal seam gas venture in Queensland, as a deal gets closer with Santos’s GLNG venture.

The oil major is firmly on the divestment trail in Australia with the $US1.1 billion ($1.2 billion) exit from Chevron’s Wheatstone LNG venture, the $2.9 billion refining and marketing sale to Vitol, and now Woodside.

Talks around Arrow, a joint venture between Shell and PetroChina, have been under way for some time, with a deal almost signed last year with Origin Energy’s Australia Pacific LNG project.

But that came to nothing, and after a revived process initiated earlier this year it is understood that another contender, BG Group, is also out of the running for any deal.

GLNG is certainly one of the three Queensland LNG projects most in need of extra gas, so from that angle, a deal on Arrow gas makes sense.

At the same time, the $US18.5 billion GLNG venture is already crowded, with Malaysia’s Petronas, French oil major Total and the world’s biggest LNG importer, Korea Gas Corp, sitting alongside Santos. Adding Shell and PetroChina would involve huge additional complications. MORE