Royal Dutch Shell has secured a stake in Australia’s coal-seam gas sector.

Shell announced it signed a preliminary $741 million deal with the fourth-largest producer in Australia, Arrow Energy.

Arrow Energy is selling a 30 percent stake in its Australian coal-seam gas tenements to Shell.

Shell is the latest player to enter the sector as exploration costs soar for offshore gas. Through its subsidiary Shell Exploration, the firm will have the right to buy liquefied natural gas produced in Australia, China, Indonesia, Vietnam and India.

The agreement also gives Shell a five-year option to acquire up to 50 percent of individual international projects, which includes activities in China. Last December Shell took a 55 percent stake in a coal-seam gas project in China’s Shanxi province and described the potential for the resource in the country as vast.

Arrow Energy is the fourth-largest producer of coal-seam gas in Australia after Origin, Santos and Queensland Gas Co.

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