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PetroChina Co., China's largest natural-gas producer, confirmed Tuesday that it withdrew a bid for an Australian coal-bed methane gas producer but said it would continue to invest in other Australia projects because of their commercial value and importance for energy security.
"We have completed a number of mergers and acquisitions in Australia and will make further investments in those projects," the company said in an email. "These projects are of strong operational and strategic significance and will [supplement PetroChina's reserves] in the future, secure needs for sustainable overseas development and bring economic returns for the company."
WestSide Corp., which has coal-bed methane gas prospects in Queensland state, said earlier Tuesday that PetroChina withdrew its 185.1 million Australian dollar (US $184.7 million) offer for the company. WestSide's shares fell 11% to 25 cents a share Tuesday on the Australian Securities Exchange.
The decision comes as labor shortages and cost pressures have squeezed energy projects in Australia.
PetroChina made the bid for WestSide in November but withdrew almost six months later "because the general situation in Australia has changed so much," WestSide said, without elaborating.
WestSide, which produces natural gas extracted from coal deposits, said it was still in talks with other parties that could invest in the company either through a gas-sales agreement, joint venture or takeover.
PetroChina's decision comes about one month after Australia's Woodside Petroleum Ltd. and its partners, including Royal Dutch Shell PLC, shelved plans for a liquefied natural gas terminal that was forecast to cost more $40 billion.
China has been on an international quest to secure multiple sources of natural gas to help it meet targets to more than double the cleaner burning fuel's contribution to its energy mix to 10% by 2020 from less than 5% now.
Piped gas imports from Myanmar are expected to start later this year, complementing pipelined supplies already coming in from Turkmenistan. China and Russia are in advanced talks for another pipeline to supply Siberian gas. LNG imports are expected to ramp up from Australia and Qatar, and China has also spent the past few years trying to jump-start development of unconventional resources such as shale gas.
WestSide's gas would have supported a small LNG project in Queensland state planned by PetroChina and a smaller Australian partner, Liquefied Natural Gas Ltd. That project was slated to produce up to 3 million metric tons of LNG a year.
PetroChina bought another small Queensland gas producer, Molopo Energy Ltd., last year for A$43.4 million, and is also is a partner with Shell in a much larger joint-venture project with Arrow Energy, also in Queensland.
The Arrow partners are still considering whether to go ahead and build a multi-billion dollar LNG plant. They face mounting cost pressures and the possibility that competing LNG supplies to Asia could emerge from North America and East Africa, making it harder to find customers.Yvonne Lee in Hong Kong contributed to this story.
Copyright (c) 2013 Dow Jones & Company, Inc.
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