The Oil Drum

The big business story of the day has been British company BG's takeover offer for Australian gas company Origin Energy - which will be the second largest takeover in Australian history if successful.

The SMH noted that "Australian energy is in hot demand at the moment. Our resources are near the growth economies of Asia and we have the infrastructure to process and transport them cheaply".

BG has only been in the Australian market for a couple of months, initially buying 10 per cent of Queensland Gas and a 20 per cent stake in the Surat Basin coal seam gas fields - then announcing plans to build a 3 to 4 million tonne per year LNG plant at Gladstone in Queensland to export this gas to Singapore and possibly other parts of Asia.

While exporting LNG from Western Australia and the Northern Territory hasn't caused a great deal of concern (bar the WA state government's attempts to reserve 15% of production for the local market), the BG plan is causing more concern as gas supplies in the eastern side of the country are more limited, with coal seam methane being the major source for the future. Diverting gas offshore pushes up the domestic price and makes the longer term supply situation more clouded.