Beijing a buyer in Shell gas facilities
A giant Beijing sovereign wealth fund has emerged as an investor in major Australian LNG infrastructure.
A giant Beijing sovereign wealth fund has emerged as an investor in major Australian LNG infrastructure, with China Investment Corporation among backers of a deal to buy a stake in Shell’s Queensland gas infrastructure for $US2.5bn ($3.3bn).
The Australian has confirmed the $1.3 trillion China Investment Corporation is a minority investor in Global Infrastructure Partners’ Australian fund, which grabbed a quarter stake in Shell’s gas storage tanks and jetties that service the state’s QCLNG export facilities in Gladstone.
The deal could present a diplomatic and political test for federal Treasurer Josh Frydenberg, who will ultimately be required to sign off on the transaction at a time when the Chinese have unilaterally blocked Australian barley and wine exports and black-listed more than $1bn of coal.
However, sources involved in the deal said CIC would probably end up with a small exposure to the gas infrastructure, which may ease any tension over the foreign investment call.
It‘s understood GIP has been engaging with the Foreign Investment Review Board for several months, ahead of agreeing to the final transaction terms this week with Shell. A decision is expected in the first half of 2021.
“The government does not comment on the details of foreign investment screening arrangements as they apply, or could apply, to particular cases,” Mr Frydenberg told The Australian on Wednesday.
The Morrison government tightened the guidelines in March, imposing a zero-dollar threshold to all foreign investment bids for sensitive assets including energy in the biggest shake-up of foreign acquisition and takeover laws in 45 years.
The discussions between GIP and FIRB are said to have given the US investment fund some confidence it will win approval, which is needed for the deal.
The Chinese investment giant splashed more than $1bn in 2016 for a 20 per cent slice of the Port of Melbourne, helping to hand the Andrews government a windfall gain.
The Treasurer will have “last-resort” powers to force assets to be sold or to impose conditions even after a sale is approved if national security is at risk.
The zero-dollar threshold for screening will apply to all foreign investments in any businesses with a national security profile, under the most comprehensive reforms to rules governing the independent Foreign Investment Review Board since it was established in 1975.
A Japanese-owned beverage giant’s plans to sell its Australian dairy and fruit juice business to China Mengniu collapsed in August after failing to get the blessing of Mr Frydenberg.
Buying Australian energy and electricity assets has also been a mixed bag for foreign investors, who have faced pushback by Canberra over national security issues.
FIRB blocked separate bids from Hong Kong’s CKI and China’s State Grid for NSW state electricity transmission company Ausgrid in 2016. While it approved CKI’s $7bn bid for DUET, which owns the Dampier-to-Bunbury gas pipeline in Western Australia, it rejected CKI’s $13bn bid for gas pipeline giant APA Group.
GIP representatives declined to comment on Wednesday.