Rumours rife on LNG consolidation

WILL they or won’t they? That’s the $64 billion dollar question.

Rumours abound that Shell is about to make a bid for British Gas (BG), which is worth about $64 billion.

In the liquefied natural gas (LNG) stakes, BG, owner of QGC (Queensland Curtis LNG) is in a more secure position among Curtis Island’s LNG stakeholders.

BG has gas and a plan far enough advanced to not need to talk to competitors Shell, Santos and Origin about consolidation.

In March BG struck a massive gas deal with China National Offshore Oil Company estimated to be worth between $50 billion and $80 billion.

This puts BG in a position to be able to drive a very hard bargain with any of the less-advanced players who might need a deal.

The liquefied natural gas industry remains tight-lipped about the consolidation of LNG plants on Curtis Island.

For some time now rumours have been circulating in the industry that the four LNG projects earmarked for Curtis Island will consolidate into two.

In May, The Observer reported the head of Shell Australia, Ann Pickard, believed consolidation made sense, with Royal Dutch/Shell bidding unsuccessfully for a strategic stake in the Santos-led Gladstone Liquefied Natural Gas project. LNG proponent Arrow Energy was successfully swallowed up by Shell and PetroChina last weekend, with the LNG project now called Arrow LNG.

The BG Group and Shell both told The Observer yesterday that they will not comment on speculation.

The industry remains tight-lipped about the consolidation of LNG plants.



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