BG Group has made an unsolicited A$12.9 billion (£6.1 billion) takeover bid for Australia's second-biggest energy retailer as it seeks to tap into soaring Asian demand for gas.

BG is proposing to pay A$14.70 in cash for Origin Energy's shares — a 40 per cent premium to the closing price on Tuesday. Origin is the leading player in the fast-growing Australian coal-seam gas sector.

If successful, the deal would cement BG's position as a truly global player in the booming world market for liquefied natural gas (LNG), which is expected to treble in size by 2020.

BG already has a strong position in Europe and the Americas but is weaker in the Asia-Pacific region. Shares in Origin soared by almost 40 per cent yesterday, suggesting that investors were not expecting a better offer.

BG shares closed down 77p at £12.31 as investors feared the group may be paying too high a price.

The British natural gas producer, more usually the subject of takeover speculation itself, made its tilt at Origin Energy as it announced a 78 per cent increase in first-quarter profits. Origin said that it had not yet considered the proposal.

The company is Australia's only vertically integrated energy group, with oil and gas production assets accounting for about a quarter of its revenues. Crucially for BG, it also has extensive undeveloped coal-seam methane assets in the Bowen and Surat Basins in Queensland.

BG has already been active in Australia this year, forming a joint venture with Queensland Gas Company to develop an A$8 billion LNG project on the coast of the eastern state.

Frank Chapman, chief executive of BG, said during a visit to Australia last month: “Our LNG supplies today are concentrated around the Atlantic basin. We have for some time been looking for a source of supply in the Asia-Pacific basin.” He said that coal-seam gas appeared to be a viable alternative to conventional gas supplies. BG provides about half the LNG imported into the US and has stakes in LNG projects in Egypt and Nigeria. But with demand expanding quickly in Asia, analysts said that BG's strategy is to gain its own sources of supply close to those markets.

BG's net quarterly profits surged to £767 million from £432 million in the same period last year, on the back of high gas and oil prices and increased production. Stripping out one-off items, the result was £789 million, ahead of an average forecast of £691 million. BG's result compares with a 12 per cent rise in first-quarter profit at Shell and a 48 per cent rise at BP.

BG's core upstream gas and oil production unit recorded a 50 per cent rise in profit on a more than 10 per cent rise in average gas prices and crude oil's 70 per cent rise.

Production of gas and oil also increased, up 4 per cent to more than 674,000 barrels of oil equivalent per day. The higher production came from the Buzzar field in the North Sea and BG's Indian interests. High prices in Asia for LNG meant that 90 per cent of cargoes were diverted to the continent, helping that division of the company to triple its profit.

— Shares in Australia's Midwest Corporation rose 2.8 per cent to A$6.27 after it recommended a revised offer from Sinosteel, turning China's first hostile bid for an Australian company into a friendly one.

The A$6.38 per share offer falls short of the A$7 price target set by Bryan Oliver, Midwest's chief executive, but represented a 13.9 per cent increase over Sinosteel's previous offer of A$5.60.

The new offer by Sinosteel, which already owns 19.9 per cent of Midwest, depends on it winning at least 50.1 per cent acceptance.

Mr Oliver said the unanimous recommendation by Midwest's board, subject to no higher offer emerging, did not necessarily mean directors would sell Sinosteel their own shares, representing about 16 per cent of the company's outstanding stock.

Midwest this year fought off an unsolicited offer from Murchison Metals.

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