Woodside Company - Essay Example

According to the policy of national interests, leaders of all countries are assumed to act in a rational way with the aim of safeguarding and pursuing their state objectives. This means that countries emulate the policies that are considered by the leaders to be of importance in developing and improving the well-being of their societies1. In their efforts to attain an economic growth and ensure transparency in the oil industries among other sectors, governments have adopted the policy of national interest.

For instance, to safeguard the interest of local and foreign investors in the Australian oil sector, the government has put in place various measures to regulate the oil industry. For example, the government prohibited Royal Dutch Shell and BHP from undertaking the acquisition of Woodside Petroleum. The acquisition was valued at $35bn. One of the major strategies that Shell Company adopted was to take over Woodside incorporation with an objective of expanding its market share. According to Peter Voser, the company chief executive officer, this strategy was emulated in order to enhance innovativeness and competitiveness thus expanding the capital base leading to expanded investment and high dividends.

Additionally, the company was focused at maintaining a sustainable cash flow that would make it to effectively meet its short-term liabilities and improve the company liquidity. However, based on the concept of the national interest, Peter Costello, The Foreign Acquisitions and Takeovers Act (FATA) treasurer rejected the move by Shell Investment Limited to purchase a majority interest in Woodside Petroleum Limited. Woodside Company is responsible for managing natural gas consortium that is based at the North West Shelf.

According to Costello, Woodside Petroleum Limited had a national interest to maximize the production of natural gas from North West Shelf in order to increase the country sales and compete with other countries in the world natural market2. Additionally, the Australian government was focused at protecting Woodside performance in the stock exchange market. Even though Shell aimed at controlling Woodside Company under the leadership of Don Voelte, Woodside management and the politician in Australia were against the Shell decision making it to be frustrated.

One of the major aspects that were targeted by Shell is the Woodside-operated Pluto project that was generating large volume of oil resulting to increased profitability for Woodside3. Additionally, Shell argued that if given authority to control the $43bn Gorgon gas project among others that are located in Western Australia, it would increase the total revenue and initiate a sustainable growth as compared to Woodside. The sale offer was valued at $10 billion4. In 2010, Shell energy Holdings Australia Limited (SEHAL) agreed to sell 78 million shares that it has in Woodside to UBS AG.

The sale resulted to the reduction of Shell interest in Woodside by 29%. In addition, the selling of the shares resulted to reduction of Shell capital in Woodside by 10%. In this regard, major issues that affected Woodside were mostly determined by the Woodside management team5. In the same way, SEHAL was focused to retain the remaining shares for at least one year. According to Peter Voser the CEO, Shell is determined to expand its investment portfolio in Australia. It is worth to note that even though Shell was prevented from acquiring majority interests in Woodside, the company purchased Australia LNG thus increasing its production capacity to 2.

7 mtpa in 2010. The company is focused at increasing this capacity to 6.5 mtpa in the next 3 years. Having sold its shares at