In today’s Wall Street Journal, there is an article talking about the delay of proving “the takeover of local Australian company Bow Energy Ltd. by a joint venture of Royal Dutch Shell PLC and PetroChina Co.” Unlike usual, the Australian Foreign Investment Review Board said it needed some more time to decide to approve this US$557 million deal, although the Bow’s board are all in favor of the takeover.
The Bow Energy Ltd. is a company focusing on developing coal-seam-gas, which mainly operates in Queensland. “Coal seam gas (CSG) is an odourless, colourless natural gas created over millions of years as a by-product while organic matter is turned into coal” (Gas types). It is one of the cleanest fossil fuels, and it could create water as a by-product. Meanwhile, it isn’t expensive.
As Australia has lots of CSG and China is one of the biggest energy import countries. If Shell and PetroChina successfully takeover Bow, they will have a lot of energy resources to export from Australia to China, which could help both Shell and PetroChina gain huge profits.
Also, as there are many competitors in the energy industry, if Shell could cooperate with the strong buyer, PetroChina, it would be more likely to be the winner in the long term. Meanwhile, PetroChina could also learn a lot of experience about natural gas production from Shell. What’s more, with the two companies’ technical strength and financial backing, the joint venture could definitely drive the development of the energy industry in Australia and provide a lot of local job opportunities.
References:
“Gas types” (2011) Switchwise Pty. Ltd. Web. http://www.switchwise.com.au/gas/explained/types/ 2 Nov 2011
Winning, David & Fickling, David. “Australia Delays Ruling on Shell-PetroChina Bid” The Wall Street Journal. Web.
http://online.wsj.com/article/SB10001424052970203716204577013271240625392.html 2 Nov 2011
These deals and merger type ventures are always interesting to hear about because they can really change the game for many energy companies.
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