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Shell eyes partnerships with national oil firms

REUTERS

* Australia major destination for investments

By Fayen Wong

BRISBANE, May 17 (Reuters) – Energy giant Royal Dutch Shell Plc (RDSa.L) may seek to forge more partnerships with national oil companies in a bid to gain greater market access, a senior company official said on Monday.

Ann Pickard, Shell’s new head of Australian oil and gas, told Reuters in an interview that Australia will also become the biggest destination for its investments in the next few years as it looks to boost its natural gas business to satisfy growing Asian demand.

“Where it makes commercial sense, we will look at more opportunities. We would like to do a bit more,” Pickard said, when asked about collaboration with state-owned energy firms.

Shell has teamed up with state-owned PetroChina (0857.HK) to bid for Australian coal seam gas producer Arrow Energy Ltd (AOE.AX) and plans to use Arrow’s gas to build a major liquefied natural gas (LNG) plant in the northeastern state of Queensland.

It was a clear win-win partnership for both parties, analysts said, as it allows Shell to get a foothold in the booming Chinese gas market, while it enabled PetroChina to avoid potential hostility amid caution on growing Chinese capital.

Pickard said the venture had not factored in the government’s proposed resource super tax when they launched a A$3.44 billion ($3.05 billion) bid for Arrow, but she would not comment if the bid would be amended due to the planned tax.

AUSTRALIA – NEXT TRANCHE OF INVESTMENTS

Pickard, who was previously head of Shell’s oil operations in Nigeria and the rest of Africa, is now tasked with a key role of growing the Australian business.

Shell said on Monday it plans to increase its LNG production capacity by 15 million tonnes per annum (mtpa) by 2020, of which most of the investment will be focused in Australia.

The energy giant is involved in a raft of LNG projects in the country, such as the producing North West Shelf development as well as the Browse, Gorgon, Sunrise and Wheatstone, which are in various stages of developments.

Pickard told reporters it expects to make a final investment decision on its flagship Prelude floating LNG project in Australia in early 2011 and plans to sell most gas through its own trading firm, which already has a number of long-term contracts.

“We’ll look at potential talks with the Pacific customers too,” Pickard said at the sidelines of an energy industry conference in Brisbane.

Shell reaffirmed its bullish outlook for global LNG market, forecasting demand to almost double to between 350 million tonnes per annum (mtpa) and 400 mtpa by 2020, compared with about 200 mtpa currently. ($1=1.129 Australian Dollar)

REUTERS ARTICLE

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