BG Declines Comment on Report of Queensland Gas Bid

By Paul Dobson

Oct. 24 (Bloomberg) -- BG Group Plc, the U.K. oil and gas producer that failed in a takeover bid for Sydney-based Origin Energy Ltd., declined to comment on a report in the Australian that it will make a full offer for Queensland Gas Co. after buying AGL Energy Ltd.'s stake in the company.

AGL Energy was halted from trading in Australia pending a ``possible material transaction,'' according to an AGL statement, while Queensland Gas also requested a halt for its shares. AGL, Australia's largest power and gas retailer, owns about 25 percent of Queensland Gas.

BG Group already owns a 9.9 percent stake in Queensland Gas and has a 20 percent interest in some of its assets. Last month BG allowed its A$13.8 billion ($8.8 billion) offer for rival Origin Energy to lapse after Origin attracted an investment of as much as $8 billion from ConocoPhillips. BG spokeswoman Jo Thethi said the company doesn't have any comment on the report.

``It may not do much for BG to take a stake that does not give control over the company,'' Andrew Pedler, an analyst with Brisbane-based Wilson HTM, said today. ``It's all about access to gas.''

Hedley Thomas, a spokesman for Queensland Gas, and Andrew Scannell from AGL declined to comment.

`Possible Transaction'

The Australian said BG has increased its stake in Queensland Gas to 36 percent by buying the AGL holding and is set to make a full offer. It said the transaction was ``understood to be the sale of AGL's shares to BG.''

``AGL is in discussion concerning a possible material transaction,'' AGL said in a statement. ``AGL expects to make an announcement about the possible material transaction prior to commencement of trading on Tuesday 28 October.''

Like Origin Energy, Brisbane-based Queensland Gas owns coal-seam gas fields in Queensland state in northeastern Australia. BG, the biggest LNG importer into the U.S., plans to develop an A$8 billion liquefied natural gas project with the company, to export the fuel by tanker and tap rising demand in north Asia.

Buying Queensland would help boost the Reading, England- based company's LNG project pipeline. Macquarie Group Ltd. analysts said in an Oct. 8 note BG will probably seek alternative investments after failing to buy Origin Energy, to improve its ability to profit from the ``premium-priced'' Asian gas market.

BG produces LNG in Trinidad and Egypt and its most advanced planned venture is the 14.25 percent-owned OK project in Nigeria, which is suffering delays.

LNG is natural gas cooled to liquid form, reducing it to one-six-hundredth of its original volume, for transportation by tanker to destinations not connected by pipeline.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net