Shell's Impact in Australian Oil, Gas `Only the Beginning,' Goldman Says

Royal Dutch Shell Plc is set to have an even bigger impact in Australia in the next year, potentially joining with Santos Ltd. to develop a gas project in Queensland and selling its refining assets, Goldman Sachs JBWere said.

Shell already has been “active,” Aiden Bradley, an analyst at Goldman Sachs in Sydney, wrote in a report. Shell, with PetroChina Co., agreed to buy Arrow Energy Ltd., advanced with the A$43 billion ($38 billion) Gorgon liquefied natural gas project led by Chevron Corp. and said it would use floating LNG technology for the first time to develop the Prelude venture.

“We believe that this is only the beginning” as The Hague-based Shell continues its shift toward gas from oil, Bradley wrote today. “Over the next year we believe its focus on this combination of Australia and LNG will again have far- reaching implications for the oil and gas sector here.”

Shell may acquire more reserves to support a coal seam gas- to-LNG project in Queensland and cooperate with Santos, the Adelaide-based company planning the Gladstone LNG development, Goldman said. The oil producer, which runs the Clyde and Geelong refineries, also may sell its “downstream” operations in Australia to a U.S. or Asian refiner and join Chevron’s Wheatstone LNG project, according to the report.

Ann Pickard, previously based with the company in Lagos, Nigeria, became Shell’s top executive in Australia this year. Pickard, executive vice president for oil and gas exploration and production, is also succeeding Russell Caplan as chairman in Australia.

Beyond 12 months, Shell is likely to “re-evaluate” its 34 percent interest in Woodside Petroleum Ltd., the Perth-based company that’s Australia’s second-largest oil and gas producer, the report said. Shell will probably not make a decision on the Woodside position until mid-2012, he said.

“This stake is not a position we feel Shell is likely to be satisfied with longer term,” Bradley said.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

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