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Foreign Investment Proposal – Shell Australia Investments Limited’€™s (Shell)
April 23, 2001
IMF Predicts Favourable Economic Prospects for Australia
April 26, 2001
Foreign Investment Proposal – Shell Australia Investments Limited’€™s (Shell)
April 23, 2001
IMF Predicts Favourable Economic Prospects for Australia
April 26, 2001


Transcript No. 2001/044



Hon Peter Costello MP


Interview with Paul Murray, 6PR

Tuesday, 24 April 2001



SUBJECTS: Shell/Woodside


Good morning Treasurer.


Good morning Paul.


Good to talk to you. Treasurer, does it matter how the foreign markets react

to your decision?


Look, Australia operates a welcoming climate for foreign investment. That is

the first point I would make and we encourage it where it develops Australias

economy and creates jobs, and it is very rare that we reject an application

to the Foreign Investment Review Board. This was one of those rare occasions

and the reason I took the decision that I did is I am not thinking about tomorrow

or the next day, I am thinking about Australias largest energy resource for

the next decade, two decades and three decades, and I believe it is in the

national interest of Australia that the operator, manager and marketer of our

largest resource develops it to its full and sells LNG in preference to exports

from any other area in the world and to those large Asian markets. I think

that is in the national interest of Australia and that is why I took the decision

that I did.


(inaudible) Shell has an inherent conflict here (inaudible) holding a (inaudible)…


You have got to remember that when large Chinese, or Japanese, or Korean energy

users are looking at taking the supply of LNG they can take that from the North

West Shelf, or they can take it from the Middle East, or they can take it elsewhere

in Asia, and I want them to take it from Australia because I want to boost

Australias export income and that is in our national interest, and I will

always take the decisions that I think are right to support Australias export



(inaudible) for that gas terminal in China. Shell actually (inaudible) consortium

against Woodside. Shell I think (inaudible) at that stage (inaudible) Indonesia.

Was this a matter that you looked to in making your decision?


Well, when you speak to people who are involved in the marketing of Australias

LNG they will tell you that they go up there and they compete with other areas

and in some of those other areas Shell has an interest. Now, Shell has an interest

in the North West Shelf, but the critical thing to my mind is who is going

to operate, manage and market the North West Shelf? And I want the North West

Shelf to have every opportunity of beating foreign bids. That is good for Australia,

it is good for Western Australia and I think it is in the national interest.


Treasurer, Shell, in its statement yesterday, said it had offered you significant

undertakings and it thought that the joint venture partners, (inaudible), would

ensure the optimum development of the North West Shelf. It includes the (inaudible)

independent marketing company owned and resourced by all the joint venture

(inaudible). Why wasnt that a factor for you?


Shell, when I raised concerns, Shell did offer a number of conditions and I

said yesterday I think that Shell approached this matter in a very positive

way. What concerned me, however, was I only have the power to give the approval

or prohibit it. If I were to give the approval on certain conditions and those

conditions were not subsequently met I cant take the approval back, it is

gone, it is finished. And what concerned me was, in relation to a number of

those conditions, notwithstanding the fact that Shell would use its best endeavors,

it would have to get the agreement of the other joint venturers, there could

be intervening developments elsewhere in the world, there could be different

views amongst the shareholders and my approval would have been given but the

enduring conditions could not be guaranteed. And I thought if the subsequent

conditions could not be guaranteed on an enduring basis that was one of the

things that made a conditional approval risky.


Treasurer, in the last 5 years there has been (inaudible) and relocated in

London. You have seen AXA take over National Mutual, but their Asian operations

arent (inaudible) out of Australia. Were you disappointed with those outcomes?


Neither of those outcomes were approved by me, they were under the previous

government, but obviously I followed those outcomes. In both of those outcomes

an approval was given subject to subsequent conditions and I think in both

of those situations it illustrates some of the difficulties about insisting

on conditions to be undertaken subsequent to the bid. And we were always in

this position where the bid had gone through, it had been approved. There wasnt

much you could do about it after it had gone through. If you really want to

ensure that the conditions are met it is better to have them met before the

approval goes through or at least be sure that they can be guaranteed. And

that is something, and I did take into account previous experience, it was

something that was weighing on my mind.


And finally, Mr Costello, Alan Wood, writing in The Australian today, suggests

that there might be the fingerprints of Hanson on this?


Paul, anyone who knows me knows how I believe One Nation and its economic prescriptions

would do a lot of damage to Australia, and anyone who knows me knows that I

would not be influenced in the slightest by her or her political movement.

I had one obligation here, and one obligation only, I had to decide in the

end what was in the national interest. You may agree with me, you may not agree

with me, people are entitled to their own opinions, but somebody had to decide

this and it was my responsibility and I did it to the best of my ability based

on what I think is best for Australia and that is the only thing I considered.


Okay, thank you.


Thanks very much Paul.