Santos in Woodside's crosshairs  

The SMH has a report on rumours that Woodside is considering a bid for coal seam gas producer Santos - Santos in Woodside crosshairs .

The Santos share price has risen strongly in the past three weeks on the strength of rumours that Woodside has been sounding out industry personnel about their willingness to join a team for a major venture, now said to be a move on Santos.

Analysts described the Santos rumours as chatter and pointed out that Woodside has its own LNG growth plans to pursue without having to bother with the unknowns of LNG exports from coal seam gas resources. The chatter nevertheless persists.

The theory is that Woodside would sell Santos's non-export gas interests to defray the cost of the acquisition. A bid for Santos has been on the cards since the South Australian government lifted the 15 per cent shareholding restrictions in the company - a throwback to when Alan Bond was stalking the Adelaide company.

The Santos rumour comes as BG Group has jumped to the lead in the race to become the first of the Queensland gas exporters after formally signing a deal for the supply of $50 billion of gas to China.

The signing followed the May 2009 agreement with China National Offshore Oil Corp for gas sales from its proposed Curtis LNG project near Gladstone.

The agreement covers the supply of 3.6 million tonnes of LNG annually over 20 years. The value was not disclosed and is dependent on oil price assumptions. A range of $40 billion to $60 billion is expected.

It ranks as one of the biggest LNG contracts ever written and has particular importance because it is the first fully-termed sales and purchase agreements for the supply of LNG from coal seam methane, as distinct from an understanding to buy on terms yet to be decided.

Following its 2008 takeover of QGC, BG is laying claim to a resource base to underpin the Curtis LNG development of 13.5 trillion cubic feet. The deal with CNOOC also means that the project is now fully sold on its planned output of more than 8 million tonnes of LNG annually. Previous supply deals with Singapore and Chile have been struck.

BG plans to have the plant on Curtis Island come on stream in 2014.