Arrow Energy Ltd. (AOE.AU) said Friday that Australian regulators have approved Royal Dutch Shell Plc (RDSB.LN) and PetroChina Co. Ltd.'s (PTR) A$3.44 billion bid for the company, paving the way for China's biggest direct investment in Australia's booming coal seam gas sector.

In a statement, Arrow said Foreign Investment Review Board approval of the deal, which follows clearance by the Australian competition regulator earlier this month, means the joint venture can now seek regulatory approval from Chinese authorities.

FIRB's approval shows that Australia remains open to Chinese investment in its natural resources sector and is broadly in line with FIRB's view, expressed last year, that Australia is more comfortable with foreign investments by state-owned entities below 50% in new projects and below 15% in major producers.

PetroChina will end up with 50% of Arrow, a relatively small company in Australia's resources sector, and participate in Royal Dutch Shell's plan to build a large liquefied natural gas project using Arrow's gas at the port of Gladstone in Queensland state.

Australian companies Origin Energy Ltd. (ORG.AU) and Santos Ltd. (STO.AU) already have a large foothold in the coal seam gas sector though LNG joint ventures in Queensland with ConocoPhillips (COP) and Malaysia's Petroliam Nasional Bhd. (PET.YY).

Arrow said it is still on target to hold a shareholder meeting to consider the scheme in mid-July. A rejection by shareholders is unlikely, given it would send Arrow shares plummeting and biggest shareholder New Hope Corp. Ltd. (NHC.AU) has indicated it will support the deal.

China National Offshore Oil Corp. recently agreed to take a 10% stake in BG Group Plc's (BG.LN) proposed LNG terminal in Queensland and a 5% stake in an associated coal seam gas field.

Outside the coal seam gas sector, Australia last year granted conditional approval for a A$3.54 billion takeover of coal miner Felix Resources Ltd. by Yanzhou Coal Mining Co., marking the largest Chinese takeover of an Australian company.

In securing approval, Yanzhou agreed to hold the assets in an Australian-based company and list that company on Australia's stock market by the end of 2012, by which time it will reduce its ownership to below 70%.

Australia's decision to approve the Felix deal contrasted with FIRB's move last year to reject a Chinese company's offer to take control of rare-earths miner Lynas Corp. (LYC.AU).

Lynas was proposing to build the biggest new rare-earths mine in the world and China already controls about 95% of global rare-earths production.

FIRB typically doesn't release an explanation for its decisions and a FIRB spokesman declined to comment.

-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; bill.lindsay@dowjones.com
Lynas Rare Earths (ASX:LYC)
Historical Stock Chart
From Oct 2024 to Nov 2024 Click Here for more Lynas Rare Earths Charts.
Lynas Rare Earths (ASX:LYC)
Historical Stock Chart
From Nov 2023 to Nov 2024 Click Here for more Lynas Rare Earths Charts.