Swan over a barrell as Colin Barnett fuels Woodside fire

HANDS off Woodside: that was West Australian Premier Colin Barnett's pointed message for BHP Billiton amid speculation that the Big (former) Australian might like to acquire the WA-based petroleum company. But can Barnett back up his rhetoric? Or is he the political equivalent of a frill-necked lizard or a dog whose bark is worse than its bite?

You see, Barnett believes he has a lot to lose if the idea of a Woodside takeover by BHP gains momentum, and he may be right. Barnett doesn't want a takeover now or at any time in the future because he worries that it would de-prioritise gas projects in his home state. The reason being that a larger entity like BHP, with so many global interests, might have other projects it wants to fund first, slowing development in WA.

Barnett has staked his premiership on rapid, sustained growth.

BHP is considered a foreign company under Australian takeover laws. That means the federal government can reject any potential takeover bid for Woodside. That could put Treasurer Wayne Swan in an awkward position, far more so than his recent musings before rejecting the Singapore bid for the ASX. Stimulating that awkwardness is Barnett's only real way of backing up his rhetoric.

The Premier is pushing the line that he exerted strong influence over Peter Costello's decision in 2001 to reject a bid by Shell to acquire Woodside, the implication being that he could do so again.

But Swan hails from a different political party, has vastly different policy priorities to those Costello had during his time as treasurer, and Swan may not be as concerned about political fallout in the barren land of WA as Costello needed to be.

Labor only holds three of 15 seats in the House of Representatives coming out of the west, and with heady debates going on over the mining tax, state agreements regarding healthcare and so on, that doesn't look likely to change any time soon.

At first glance you might think the poor showing by Labor in the west would give Swan political reason to follow Barnett's lead in blocking BHP in the hope of building up support on the back of the Premier's popularity.

But doing so might be the greater of evils for Swan. A war with Barnett on this issue wouldn't be pleasant for Labor, to be sure. But the government hardly needs to worry about losing any more seats in WA, surely. (If it did, the irony is the next most vulnerable Labor seat in the west is Brand: the electorate of Gary Gray, a former Woodside executive.)

All that is to be lost for Labor in WA is the opportunity cost of not winning back seats, which it isn't expecting to do anyway. Time will tell if Barnett has other ideas about how he can exert his will.

On the other side of the spectrum sits the larger than life figure of Marius Kloppers, managing director of BHP. With the debate over the carbon tax likely to dominate the political cycle between now and the next election, it is hard to see any circumstances in which it would be wise for Swan to upset the big South African running the Big Australian.

Kloppers was, of course, one of the powerful figures behind the anti-mining tax campaign that brought down Kevin Rudd. He was one of the figures behind the all-important new mining tax deal Julia Gillard struck with BHP, Rio Tinto and Xstrata which preserved (perhaps only temporarily) Labor's dignity after backing down from the original plan.

Kloppers' comments on the need to create certainty by pricing carbon, made in September last year, were also important.

What he ultimately chooses to say and do about the new carbon tax paradigm will be significant. If Kloppers wants Woodside but Swan blocks it, he is hardly going to feel sympathetic towards the government's plight. Read into that what you will.

Swan may not like making hard decisions. But if BHP goes after Woodside, chasing a full takeover instead of simply acquiring Shell's stake in the company, the Treasurer will need to decide what the government would prefer least: a premier unhappy and on the warpath, or Australia's most powerful businessman perhaps acting the same way. And that's before even considering the national interest.

Good luck navigating your way through that one, Swanny.