Chinese state owned petroleum major PetroChina has teamed up with Royal Dutch Shell in a bid for  Arrow Energy Ltd, an emerging Australian leader in coal seam gas (CSG) development.

The initial bid of A$3.3 billion ($3 billion) valued Arrow's shares at $4.45, a 28 per cent premium on last week's close of $3.48.

The Anglo Dutch major already owns a 30-per cent stake in Arrow's domestic assets, acquired two years ago.

Shell and PetroChina recently agreed to work together to develop shale gas projects in China.

According to analysts, the joint bid for Arrow makes sense as last June the Australia had spurned a single handed attempt by Chinese aluminium major Chinalco to acquire a stake in Rio Tinto for nearly $19.5 billion (See: Rio terminates Chinalco deal; to raise $15.2 billion through rights issue).

The two oil giants will have the capital resources that Arrow will need to develop its coal-gas reserves, analysts said.

Brisbane-based Arrow Energy said earlier this month that the Gladstone LNG project may cost around $1.96 billion and the company may raise funds through a stake sale, debt or share sale to finance the prestigious project (See: Australia okays Arrow Energy's $490 million gas pipeline).

Fisherman's Landing is one of the five CSG to LNG projects in the pipeline in Queensland and Arrow is the first company to be awarded a licence for a pipeline for the transportation of gas from Surat basin to Gladstone.

The LNG project has already obtained the government's environmental clearance.

According to media reports, Australia has vast reserves of coal-bed methane and has attracted some $18 billion in foreign investment over the past two years to develop this resource.

Malaysia's national oil company Petronas as well as oil majors like ConcoPhillips have acquired stakes in the industry.

The Shell-PetroChina bid for Arrow will involve the two companies in delivering the gas production to China and other Asian importers via liquefied natural gas shipments.