IT WAS in 1626 that Peter Minuit, the director general of New Netherland province, bought the island of Manhattan from the local Indians for trinkets and cloth valued at 60 guilders.Perhaps one of the descendants of Minuit is a top executive of Royal Dutch/Shell.The proposition that Shell could lift its 34 per cent stake in Woodside Petroleum to 60 per cent effective control, in return for a swag bag of production and exploration acreage, sounded rather like the Indians and Manhattan all over again.That is not quite how Woodside chairman Charlie Goode put it when formally rejecting the overture.You have to be somewhat circumspect in the corporate equivalent of having a dispute with your father-in-law.Shell and Woodside signed an agreement in August 1998, trumpeted as an alliance to help Woodside lift its game, while specifically protecting its independence.At that time, Asia was plumbing the depths of the financial crisis and the price of oil was headed for a 24-year low of US$10.35, touched the following December.The world is now a different place. This is a good time for the North West Shelf to be producing 7.5 million tonnes of LNG, 42 million barrels of oil and 150 billion cubic feet of natural gas.The NWS partners are ready to build two new production trains, creating over six million tonnes of extra capacity.Japan remains the traditional buyer, but the economies of Taiwan and China are growing like Topsy and have huge energy needs.Memorandums of understanding are in place for those countries to take clean green LNG from politically stable and reliable supplier Australia.Arthur Dixon, head of the ALNG joint marketing group, has done an exemplary job in those ticklish negotiations and seems sure to crown that by signing up India to take up to four million tonnes of LNG, just as the expanded production is due to come on stream in 2005.You cannot blame Shell for hatching up a wheeze that would land the trifecta of doubling its exposure to the NWS, deliver control of Woodside and leave its financial exposure unchanged.Woodside is finally reaping the rewards of 30 years of blood, sweat and tears. In not much over a year, its oil assets have gone from a bore to a bonanza.The company is wallowing in an annual cash flow of $1.5 billion and it does not have to go cap in hand to anyone.It was curious that Woodside shares dipped a few more cents to $12.50 following news of the brush-off given to Shell.Little enthusiasm for the proposal is evident among the more than 40,000 shareholders.The spectacle of control of Woodside passing into foreign hands, without a decent premium paid to the minorities remains unwelcome.However, like a successful bungee jumper, Shell will come back.
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