Page last updated at 07:59 GMT, Monday, 22 March 2010

Shell and PetroChina ready to pay $4.3bn for Arrow

Arrow energy
Arrow has accepted an increased bid from Shell and PetroChina

Royal Dutch Shell and PetroChina have had an improved 3.44bn Australian dollars ($3.14bn, £2.1bn) takeover bid for Australia's Arrow Energy accepted.

Shell and PetroChina's new joint bid is up from their $2.96bn offer made earlier this month.

It now needs approval by Australian authorities and Arrow shareholders.

The deal would give the bidders a foothold in Australia's emerging coal seam gas industry, which looks set to become a big exporter for the country.

Arrow's largest asset includes Australia's biggest holding of methane gas.

"This transaction crystalises the value of more mature assets that have been built in Arrow's Queensland business through the rigorous execution of our business strategy," said Arrow chairman John Reynolds.

"In addition, we are creating an exciting opportunity for Arrow Energy shareholders to continue to participate in a portfolio of earlier-stage development assets in Australia and the broader Asian region."

China's interest in Australia's energy assets is being closed watched.

PetroChina in August bought $41bn of LNG from Gorgon, underlining fast-developing China's appetite for natural resources.

In December China's Yanzhou Coal secured a $3.2bn buyout of Felix Resources, while miner Rio Tinto rejected Chinalco's $19.5 billion cash injection in June.

But relations between Australia and China have been strained over the trial in Shanghai of four employees of Rio accused of bribery and industrial espionage during iron ore contract negotiations.

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