Woodside and Shell have both refused to comment on this speculation, but Shell did confirm that its executive had met with government officials recently before making an announcement on the Gorgon gas project.
Shell’s poor reserves position meant it was likely to want to acquire another petroleum explorer and producer, according to UBS. Woodside’s growing reserves and production and its exploration in promising Mauritanian and Libyan prosepcts made it an attractive target.
Shell already owns 34% of Woodside and is a partner in the North West Shelf project. In 2001 Shell tried to take over the Perth-headquartered company. But Treasurer Peter Costello blocked the $10bn bid because of concerns Shell would favor its own projects over the North West Shelf venture.
But in a new report, UBS said “circumstances are arguably different now" because the North West Shelf project was now maturing and other Australian LNG operations were being built or planned.
“If Shell were to revisit its desire to gain control of Woodside, we believe it would be incorrect to assume an automatic rejection from the Foreign Investment Review Board," the UBS report said. “It could possibly structure a new offer that is tailored to be more attractive to all parties involved.”
Shell is also a partner in the Gorgon LNG project which is located in offshore north-west Australia in the same basin as the North West Shelf venture.
Gorgon was one of the assets at the centre of the Royal Dutch-Shell reserves booking scandal.
Shell has said its oil and gas reserves as of 2002 were overstated by 41%, but it is now saying it will book Greater Gorgon reserves when all Securities and Exchange Commission requirements are met. With the final investment decision for Gorgon planned for mid 2006, that may not be too far away.
Shell had recognized more than 500 million barrels of reserves from the project since 1997, before the Gorgon partners had made the final investmemt decision.
Shell currently has no proved reserves in the Greater Gorgon area.
The Gorgon partners – ChevronTexaco, Shell and ExxonMobil – restructured their interests in the Greater Gorgon region this week, unitising their assets in order to boost the project’s critical mass.
ChevronTexaco now has 50% (formerly 4/7 share), with ExxonMobil (previously 2/7 share) and Shell Australia (previously 1/7 share) now having 25% each. BP, which has a minority interest in the Io field, has not joined the agreement which covered 11 gas fields in the Greater Gorgon area.
Interests in the North West Shelf are Woodside Energy (16.67%) BHP Billiton (North West Shelf) (16.67%); BP Developments Australia Pty Ltd (16.67%); ChevronTexaco Australia Pty Ltd (16.67%); Japan Australia LNG (MIMI) (16.67%); and Shell Development Australia (16.67%).