Australia blocks Shell takeover bid

Costello (left), with Prime Minister Howard, said the Shell bid was not in Australia's national interest

SYDNEY, Australia (CNN) -- Australian Treasurer Peter Costello Monday blocked Shell's takeover bid for Woodside Petroleum, operator of the North West Shelf oil and gas project.

Costello said the $5 billion Shell bid was not in the national interest.

The Australian dollar dropped immediately by a cent as investors digested the news. It was trading at 51.03 US cents after hitting a high of 52.03 earlier in the day.

Costello said he would consider an alternative proposal from Shell. He said Australia had a liberal foreign investment policy but he had to consider the national interest.

He described the North West Shelf as "probably Australia's premier energy resource". It is Australia's single largest export earner and recently committed to a $780 million expansion to meet additional liquefied natural gas (LNG) sales to Japanese customers.

Shell is already an equal partner in the North West Shelf project with Woodside, BHP, Japan Australia LNG (MiMi) and local units of Chevron and BP Amoco.

Shell announced a takeover offer on November 24 last year which would have given it a controlling interest in Woodside.

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