Shell makes 'significant' Australia offshore find

Shell Development Australia Pty Ltd, which is battling to take control of Australia's Woodside Petroleum Ltd, said yesterday its Iago 1 well offshore Western Australia had found a "significant hydrocarbon column". The well in WA-25-P, in which Shell has a two-sevenths stake, is between the Gorgon field and the North West Shelf gas reserves and has the same stakeholders as the Gorgon joint venture.

A spokeswoman for the Royal Dutch/Shell unit said the depth and composition of the column was still unclear, but its location near other major discoveries was promising. "They are still evaluating the discovery at the moment," she said. Shell is seeking Foreign Investment Review Board approval to boost its Woodside
stake to 56 per cent from 34 per cent.

The Western Australian and Northern Territory governments have argued the move would not be in the national interest, due to concerns the multi-national energy giant may put development of offshore resources ahead of Australian projects. Woodside said this week joint-ventures in which it was operator had been responsible for 55 per cent of Australia's oil discoveries for the past 10 years, and 75 per cent in the past three years.

Shell Australia Investments Ltd chairman Raoul Restucci was scheduled to meet with institutional shareholders this week to help win support for the offer. Shell has offered A$14.80 a share plus a call option as a first stage of the bid. An asset for shares swap to give Shell a 56 per cent stake will be put to a Woodside shareholder meeting between March and June.

Permit area WA-25-P is operated by two-sevenths stakeholder Chevron Australia Pty Ltd, a unit of Chevron Corp. A local unit of Exxon Mobil Corp has a two-sevenths stake and a unit of Texaco Inc has a one seventh stake.

The Iago 1 well was drilled to a total depth of 3,383 metres. Water depth at the location is 118 metres. Shell has cited improved integration of the Gorgon and Woodside-operated North West Shelf gas venture as a key reason behind its bid for the Australian company.