Royal Dutch Shell and PetroChina jointly bid $3 million for Australia’s Arrow Energy (ASX: AOE.AX). The move sent Arrow’s stock soaring (up 47%) and it boosted all the Asian Markets Monday morning. Arrow is the biggest domestic coal-seam gas supplier in Australia which Shell already has a 30% share in, but teaming up with Petrochina came as somewhat of a surprise. The deal may help Shell expand its influence in China. Western oil majors are eager to establish refineries in China, one of the fastest growing energy markets in the world, but the government restricts foreign investment.
The deal is mainly a surprise because Australia has had strained relationships with China. Remember the Rio Tinto deal last year where China arrested four Rio Tinto staff members on charges of bribery and stealing business secrets. But surging gas prices are increasingly drawing investors to coal-seam gas, a new and underutilized energy source that analysts say could meet a sizeable part of Asia's future gas needs.
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