BG GROUP is in talks on a £2 billion takeover of Queensland Gas, just six weeks after it withdrew a bid for a larger Australian rival.

The FTSE 100 gas group was this weekend holding final negotiations with AGL Energy, Australia’s largest utility, to buy its 25% stake in Queensland.

The agreement would pave the way for a full offer for Queensland worth as much as A$5 billion (£2 billion). The takeover offer could come as soon as tomorrow.

Shares in both AGL and Queensland were suspended on Friday. The final terms are yet to be agreed and talks could still break down, according to sources close to the situation.

BG bought a 10% stake in Queensland this year as part of a deal to use the latter’s coal-seam gas (CSG) reserves as feedstock for a huge liquefied natural gas (LNG) facility it plans to build. Nearly all of BG’s LNG shipments are bought by gas-hungry Asian nations, such as Japan, which are willing to pay far more than other countries less dependent on imports.

BG’s supply base in the region is negligible and it is keen to build up its business there. CSG is methane gas that is trapped in coal deposits. Australia is one of the world’s largest coal-mining countries.

Last month BG withdrew an A$13.5 billion offer for Origin Energy, owner of Australia’s largest CSG reserves, after the oil giant Conoco Phillips signed a joint venture with the company that valued it at more than BG had offered. Petronas of Malaysia set the bar this year when it paid a hefty premium for a stake in the CSG reserves and an LNG plant planned by Australia’s Santos.

BG has hired JP Morgan to lead its talks with AGL after dropping Goldman Sachs, which advised it on the failed Origin offer. AGL is being advised by Citigroup.

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