article "chinese poised to acquire westside"

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Chinese poised to acquire WestSide

by: MATT CHAMBERS
From:The Australian
December 19, 201212:00AM


Source: The Australian


PETROCHINA is poised to become the first Chinese company to buy an Australian coal-seam gas miner, having lobbed a $185 million bid for CSG junior WestSide.

It is understood PetroChina, which with Shell jointly bought Arrow Energy for $3.2 billion in 2010, is the unnamed party that has been conducting due diligence on WestSide, which owns CSG ground in Queensland's Bowen and Galilee basins.

This phase is now believed to be complete, and PetroChina and WestSide are said to be planning an announcement before Christmas or early in the new year.

As well as its stake in the big Arrow CSG project, PetroChina has a non-binding deal with LNG Limited (of which PetroChina's parent company, China National Petroleum, owns just under 20 per cent) to supply gas to a small LNG plant being planned at Fisherman's Landing near Gladstone.

In August, the state-owned oil giant also bought Molopo Energy's Queensland CSG ground for $41m.

The WestSide bid continues China's steady expansion into Queensland's CSG export projects and follows a $US5bn ($4.7bn) move in November by China National Offshore Oil Corporation to increase its stake in BG Group's Queensland Curtis LNG project.

This came after a $2.5bn move by Sinopec to take a 25per cent stake in the Australia Pacific LNG plant run by Origin Energy and ConocoPhillips.

China now has interests in four of the five export projects that are trying to ship LNG out of Gladstone.

In November, WestSide revealed it had received an indicative 52c-a-share cash offer from an unnamed party that had been granted due diligence.

LNG Limited, which had been conducting due diligence, confirmed it was no longer "directly" bidding and had no intention to do so. Analyst speculation centred on PetroChina -- which has not said how it plans to supply LNG Limited -- as the likeliest contender.

WestSide yesterday would not comment on whether PetroChina was the party that had conducted due diligence.

Shell has said it is considering combining Arrow's reserves with those of the other projects planing to export out of Gladstone, but it is understood not to be in talks with the smallest of these, run by LNG Limited.

LNG Limited yesterday said the expected cost of the Fisherman's Landing plant remained at $US1.1bn, flagged at the start of the year, despite inflation that has plagued the sector.

This includes an LNG production train of 1.9 million tonnes a year, a storage tank and a jetty. "This represents $US450 per tonne per annum LNG production capacity, being less than half the cost being reported for Australian LNG projects," LNG Limited said.

Other LNG trains being built in Australia in the present explosion of export projects have capacities of between three million and five million tonnes a year.

LNG Limited managing director Maurice Brand said plans to build the LNG train in modules overseas had helped the overall cost to remain unchanged.