accc delays decision on bow and arrow deal

delays foreign investment decision on Bow deal

* Chinese investments often involving resources have faced close scrutiny

CANBERRA, Nov 2 (Reuters) - The Australian government's Foreign Investment Review Board on Wednesday said it had postponed a decision on the takeover of gas explorer Bow Energy by Arrow Energy, a venture between Royal Dutch Shell and PetroChina .

Under a ruling released on Wednesday, the takeover will be prohibited for up to 90 days from Oct. 25, while the foreign investment arm of Australia's Treasury looks further into the foreign investment application.

In September, Bow Energy said it recommended shareholders vote in favour of the A$535 million deal ($524.2 million), with an offer of A$1.52 a share, up from Arrow's previous offer of A$1.48. Bow was trading at A$1.485 on Wednesday.

Foreign investment takeovers involving Chinese firms have come under scrutiny in Australia after a string of rejections, and after Australia changed its rules in 2009 to ensure closer examination of deals from state-owned enterprises.

In 2009, China Non-Ferrous Metal Mining Co was blocked from buying a controlling stake in rare earths miner Lynas Corp. . Australia also blocked China's Minmetals bid for Oz Minerals' Prominent Hill copper and gold mine because the mine was too close to a defence rocket range.

Australia has been the biggest target for Chinese investment over the past five years, with direct investments worth more than A$16 billion, according to Australia's Treasury Department. Chinese interest has widened from resources into real estate, financial services and power generation.

Under the takeover, Arrow Energy would use Bow's gas assets to expand the first two trains on its liquefied natural gas project near Australia's eastern port of Gladstone.

The Arrow LNG project, which is expected to come online around 2017, is one of four coal-seam gas to LNG projects worth an estimated $70 billion near Gladstone.

The first phase of the project was expected produce 8 million tonnes per annum (mtpa) of LNG, and Arrow Energy had been planning to eventually expand Arrow LNG to 16 mtpa. The Bow acquisition would allow Arrow LNG first phase to produce 9.2 mtpa and expand beyond 16 mtpa.


http://www.reuters.com/article/2011/11/02/australia-arrow-idUSL4E7M21U220111102