The bid, confirmed by Shell, marks a Chinese company's first foray in Australia's coal-bed methane sector.
Arrow has announced that the conditional proposal for its domestic assets, from a vehicle jointly owned by the two oil majors, would give its shareholders A$4.45 in cash per share. Shareholders will also get stake in a new entity that will operate Arrow's international business.
The bid announcement sent Arrow's shares soaring by 45 per cent to touch A$5.03 in Sydney.
Coal-bed gas is natural gas trapped in seams of coal. Arrow has invested billions of dollars in some of the largest coal-bed methane reserves located in Queensland's Bowen and Surat Basins.
The bid is the latest in a series of proposals by the oil companies to acquire a stake in the sector. Energy giants such as the BG Group, ConocoPhillips and Petronas have already invested billions of dollars in Australia since 2008 for converting the coal-bed gas to liquefied natural gas (LNG) and shipping it to Asia.
Analysts say the participation of PetroChina in the Arrow bid shows its interest in securing long-term gas supplies from Australia's coal-bed methane industry.
Arrow previously planned to float its international unit through an initial public offering in 2010.
