Chinese investors focus on Australia's shale gas

Australia is a good potential investment target in the shale gas sector for Chinese companies as the domestic industry hopes that its own developments there can help meet soaring demand, according to several experts in the field.

"It is a good idea to invest in Australia's shale gas business in terms of its geology and transportation to China, as well as the size of the resource opportunity and the likelihood that these new gas sources will drive the expansion of liquefied natural gas projects," said Will Rathvon, global head of Natural Resources with Australia and New Zealand Banking Group Ltd.

Australia has mature infrastructure and technology for shale gas development. Land prices in Australia are much cheaper than in the United States, which can be a good choice for the Chinese investors, he said.

China's top three oil and gas companies - CNOOC Ltd, PetroChina Co and Sinopec Co - have all invested in Australia's LNG market, which is seen as good preparation for shale gas investments as the shale resources must be converted to LNG for China delivery.

"In Australia, some medium-sized and small exploration and production companies want to cooperate with Chinese oil and gas companies in the shale gas sector," Rathvon said. "They own sizable shale gas acreage, and ANZ can connect these people."

According to the Australian Research Council, the country has considerable shale gas resources, but there is a high degree of uncertainty attached to them.

"The commonly cited undiscovered resource value of 396 trillion cubic feet of gas is based on only four basins. But if all prospective basins are considered, the undiscovered resource could be in excess of 1,000 trillion cubic feet," the council reported.