Shell shock as Aussie bid is blocked

By LACHLAN COLQUHOUN
Updated:

 

ROYAL Dutch/Shell's A$10bn (£3.57bn) bid for control of Australia's largest oil producer, Woodside Petroleum, has been blocked by the Australian government. In a shock move, Australian Treasurer Peter Costello has ruled the Shell bid 'contrary to the national interest'.

Shell, which already owns 34% of Woodside, had been seeking to raise its stake to at least 54% through a cash-and-option offer, and an injection of assets into the company.

The bid is Shell's second for Woodside. An earlier friendly offer was rebuffed by the Woodside board last year. Shell and Woodside are partners in Australia's biggest oil and gas field, the North West Shelf development off the coast of Western Australia.

'Woodside is the operator of the project and it is in the national interest of Australia that the project be developed to its full capacity and that Australia's export sales from the North West Shelf are maximised,' said Costello.

'Australia welcomes foreign investment - there's no change of policy there. But we also have to have an eye to the national interest for maximum exploitation of our resources and for maximising Australia's export revenues.'

Costello said Australia's Foreign Investment Review Board, which is charged with advising the government on foreign takeovers, had failed to reach an agreement on the Shell bid.

'I made the decision on my own,' he told a Press conference. 'It's not that Shell hasn't been a good corporate citizen. They have been a valued investor, but I felt that retaining Australian control of Australia's biggest energy project was in the national interest.'

The decision was a surprise as another member of the government told journalists he expected the bid to be approved, but with conditions.

Woodside shares edged higher in anticipation of a green light for the bid but were suspended from trading just before the announcement. The Australian dollar immediately fell half a cent to 51 US cents.

The Shell bid has become a hot political issue and has stirred up strong feelings of nationalism within sections of the electorate. The government, which faces an election this year, has been slipping in the polls and the Woodside issue has been a part of the political backlash.

Costello said he would consider an 'alternative proposal' from Shell if it met the government's objections.

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