Thursday, August 04, 2005
LexisNexis(TM) Academic - Document
Copyright 2005 Nationwide News Pty Limited
The Courier Mail (Queensland, Australia)
August 4, 2005 Thursday
SECTION: FINANCE; Pg. 21
LENGTH: 650 words
HEADLINE: Woodside next in Beijing's sights?
BYLINE: Terry McCrann
BODY:
WHAT if China came knocking on Woodside Petroleum's door?
Indeed, perhaps that question should be "when" not "if".
It would pose delicate, even delicious questions in business terms, in foreign investment terms, and on the geopolitical front.
Woodside is our single biggest corporate oil and gas company. It is also "available" after the Federal Government prohibited its full acquisition by its biggest shareholder Shell. Its acquisition by a cash-rich, energy-hungry China would seem an absolute no-brainer. So what would "we" say, if an approach was made?
Yesterday the Chinese Government-controlled oil group CNOOC abandoned its attempt to buy big US oil group Unocal.
Interestingly, with Woodside capitalised at a tad more than $20 billion, any bid for it would cost pretty much the same as the $24 billion CNOOC had been offering for Unocal.
The Unocal bid made three very significant statements. That China was prepared to spend some of the cash garnered from its continuing huge trade surpluses.
It was prepared to play with the big boys of Western capitalism -- indeed, the very big boys -- by making a hostile takeover bid for a major publicly listed company.
And thirdly, and crucially so far as Woodside is concerned, it wants to buy oil assets and is prepared to buy them at record high prices.
That's to say it knows exactly what it wants and it knows exactly what price it will have to pay. On the basis that whatever happens in its own economy and the world's, the demand for oil and gas is only going to keep going up. Along with the price.
Now Woodside is a very different company to Unocal. Its value lies in gas resources, owned via joint ventures and already mostly pledged to a range of buyers including China.
In some ways, that mix could be even more attractive to China than a conventional US-based oil company -- which is hostage to the political, energy and economic dynamics of that country.
So why hasn't there been a move on Woodside? The answer might be as prosaic as an assumption that Woodside is "not for sale". Because of Shell's dominant 34 per cent shareholding and the Australian Government's rejection of the Shell bid for the rest.
If we wouldn't let Shell buy Woodside, why would we let China? That in itself raises some tantalising, even tricky political questions.
We wouldn't let Shell buy the rest precisely because Shell was a global oil major.
Setting aside the persuasiveness of Woodside chairman Charles Goode, essentially the concern was that Shell would "mothball" Woodside-controlled resources to enable other Shell resources to proceed first. That would certainly not be an issue if energy-hungry China was the buyer. Presumably it would want to fast-track resources it had paid $20 billion or more to buy.
While we were worried about Shell leaving the resources in the ground, would we be wildly enthusiastic about China pumping them out -- but then shipping them far away?
Continued Page 23
Woodside next on Beijing's shopping list?
From Page 21
But would Shell sell? Letting Woodside fall to China might seem fundamentally counter-intuitive.
If Shell wanted Woodside in order to stop development of its resource base, why would it sell to the one buyer that would go gangbusters on development?
Maybe because it might work to build a much more productive relationship with the country that is going to become the world's biggest energy buyer.
What about the politics? CNOOC's bid for Unocal unleashed a storm of protest in the US Congress. Would it be warmly welcomed in Canberra?
It's hard to see how the Government could reasonably reject a China bid. The grounds used to reject Shell would work to directly endorse an energy-hungry buyer. John Howard took credit for the $25 billion Woodside-led China gas deal.
It would be hard for him to say they could buy the gas but not the producer.
LOAD-DATE: August 3, 2005
The Courier Mail (Queensland, Australia)
August 4, 2005 Thursday
SECTION: FINANCE; Pg. 21
LENGTH: 650 words
HEADLINE: Woodside next in Beijing's sights?
BYLINE: Terry McCrann
BODY:
WHAT if China came knocking on Woodside Petroleum's door?
Indeed, perhaps that question should be "when" not "if".
It would pose delicate, even delicious questions in business terms, in foreign investment terms, and on the geopolitical front.
Woodside is our single biggest corporate oil and gas company. It is also "available" after the Federal Government prohibited its full acquisition by its biggest shareholder Shell. Its acquisition by a cash-rich, energy-hungry China would seem an absolute no-brainer. So what would "we" say, if an approach was made?
Yesterday the Chinese Government-controlled oil group CNOOC abandoned its attempt to buy big US oil group Unocal.
Interestingly, with Woodside capitalised at a tad more than $20 billion, any bid for it would cost pretty much the same as the $24 billion CNOOC had been offering for Unocal.
The Unocal bid made three very significant statements. That China was prepared to spend some of the cash garnered from its continuing huge trade surpluses.
It was prepared to play with the big boys of Western capitalism -- indeed, the very big boys -- by making a hostile takeover bid for a major publicly listed company.
And thirdly, and crucially so far as Woodside is concerned, it wants to buy oil assets and is prepared to buy them at record high prices.
That's to say it knows exactly what it wants and it knows exactly what price it will have to pay. On the basis that whatever happens in its own economy and the world's, the demand for oil and gas is only going to keep going up. Along with the price.
Now Woodside is a very different company to Unocal. Its value lies in gas resources, owned via joint ventures and already mostly pledged to a range of buyers including China.
In some ways, that mix could be even more attractive to China than a conventional US-based oil company -- which is hostage to the political, energy and economic dynamics of that country.
So why hasn't there been a move on Woodside? The answer might be as prosaic as an assumption that Woodside is "not for sale". Because of Shell's dominant 34 per cent shareholding and the Australian Government's rejection of the Shell bid for the rest.
If we wouldn't let Shell buy Woodside, why would we let China? That in itself raises some tantalising, even tricky political questions.
We wouldn't let Shell buy the rest precisely because Shell was a global oil major.
Setting aside the persuasiveness of Woodside chairman Charles Goode, essentially the concern was that Shell would "mothball" Woodside-controlled resources to enable other Shell resources to proceed first. That would certainly not be an issue if energy-hungry China was the buyer. Presumably it would want to fast-track resources it had paid $20 billion or more to buy.
While we were worried about Shell leaving the resources in the ground, would we be wildly enthusiastic about China pumping them out -- but then shipping them far away?
Continued Page 23
Woodside next on Beijing's shopping list?
From Page 21
But would Shell sell? Letting Woodside fall to China might seem fundamentally counter-intuitive.
If Shell wanted Woodside in order to stop development of its resource base, why would it sell to the one buyer that would go gangbusters on development?
Maybe because it might work to build a much more productive relationship with the country that is going to become the world's biggest energy buyer.
What about the politics? CNOOC's bid for Unocal unleashed a storm of protest in the US Congress. Would it be warmly welcomed in Canberra?
It's hard to see how the Government could reasonably reject a China bid. The grounds used to reject Shell would work to directly endorse an energy-hungry buyer. John Howard took credit for the $25 billion Woodside-led China gas deal.
It would be hard for him to say they could buy the gas but not the producer.
LOAD-DATE: August 3, 2005
# posted by Eastlaw @ 12:23 AM 
