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Jun 27, 2008 9:17 AM

Shell Exploration Company BV (Shell) and Arrow Energy Ltd (Arrow), have signed a preliminary agreement to jointly develop projects to extract natural gas from coal deposits in Australia, China, Indonesia, Vietnam, and India, according to Shell information.

The alliance with Australian company Arrow will boost Shell’s existing strategic positions in potential coal seam gas (CSG) areas including China, where Arrow’s international acreage is an excellent fit. Arrow has significant CSG production facilities in Queensland, Australia, where it is the largest CSG acreage holder. It has four producing projects in Queensland, and supplies gas for industrial users such as power stations.

Under the deal Shell would also acquire the right to negotiate an agreement to purchase any liquefied natural gas that may potentially be produced from the CSG operations. Shell and Arrow have also agreed to undertake further research and development in the area of gas supply. Shell will also assign at least five personnel to work at Arrow’s operations.