BG was smart in recognising what one analyst has described as one of the last great deposits of hydrocarbons. It was initially equally astute in how it went about getting a piece of the action in coal-seam gas as it sought to fill the gap in its global supply - a source of liquefied natural gas (LNG) in the Pacific Basin.

It struck a friendly 50-50 joint venture deal with Queensland Gas Company (QGC), a leading player in the sector, to build what it intends to be the first LNG terminal on the east coast of Australia. Each sticks to what it does best: in QGC’s case, getting it out of the ground and, for BG, converting the gas into liquid prior to transportation. And, all being well, BG takes 100 per cent of the planned production of 3-4 million tonnes a year to sell into the Asian market, where demand is tipped to double by 2015.

But it was clear from the outset in its pursuit of Origin Energy that it had its heart set on coal-seam gas reserves. BG had recognised what shareholders had not, forcing a revaluation of the entire sector.

Then along came Malaysia's Petronas yesterday to really spoil the party, with a deal that represented a seismic shock to valuations. The A$2.6 billion price for a 40 per cent stake in Santos’s planned LNG plant represents a price for probable reserves of A$4.91 per gigajoule, more than treble the A$1.58/GJ implied by BG’s deal with Queensland Gas in February. BG’s bid for Origin puts the valuation at about $2.85/GJ.

BG could have negotiated a similar deal to what Petronas did with Santos and what they themselves did with QGC before. It may not have given them as much upside but for a smaller capital outlay they would have had a significant if not dominant position in coal-seam gas without all the fuss. Instead, it faces what threatens to be an increasingly protracted bid battle.

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