Royal Dutch Shell, EuropeÔÇÖs biggest oil company, has reportedly made an offer of $2.5 billion for Australian coal seam gas producer Arrow Energy.
The UKÔÇÖs Sunday Telegraph newspaper said that Shell had discussed purchasing Arrow several weeks ago. On Thursday, Arrow said that it was discussing the sale of some of its Queensland-based coal seam assets.
However, ShellÔÇÖs bid is not thought to be high enough and it was reported that the talks ended in stalemate. The Dutch company is now expected to return with a revised offer.
Shell already owns 30 per cent of ArrowÔÇÖs acerage and a 10 per cent stake in ArrowÔÇÖs international unit. Arrow is the largest holder of coal seam gas acerage in Australia.
Arrow announced last month that its proven and probable gas reserves were 52 per cent higher than it had originally thought.
Coal seam gas is predominantly methane found on the surface of coal. It can then be chilled to liquid form, becoming liquefied natural gas (LNG).
There is currently a strong demand for LNG in Asia. BG Group and ConocoPhillips are two companies that have recently invested in Australian LNG projects in order to meet this demand.
It is understood that Chinese state-owned PetroChina may also be interested in making a bid for Arrow.
The reports have not been confirmed by either Arrow or Royal Dutch Shell.
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