PTT's planned $1.9 billion takeover of Cove Energy, which would see it gain access to massive gas finds off the coast of east Africa, would put the company in an ideal position to supply demand in five years' time, Neil Atkinson, director for energy research at Datamonitor, told CNBC on Tuesday.
Royal Dutch Shell bowed out of the deal on Tuesday, ending a bidding war for Cove Energy .
“Companies like Shell & PTT are trying to get their hands on projects like this which are reliable sources of demand in the future to meet demands in the future,” Atkinson said. “The holy grail for companies like Royal Dutch Shell and PTT is to be able to maintain production volumes, which is key to their success in the eyes of shareholders.”
Finding secure energy supplies is becoming ever more challenging as developing nations expand rapidly, and there are many places around the world from which companies like Shell and its peers are excluded, for example for reasons of resource nationalism, Atkinson said.
The project is “a perfect example of the kind of projects companies like Shell and its peers need in the long run if they are to generate those production volumes which is the key to their ongoing success,” Atkinson said.
Shell's exit from the deal after a five-month bidding war is regarded to be a blow to hedge funds, who had put their bets on Shell outbidding its Thai rival. There are rumors Shell pulled out of the race because the energy giant found other sources.