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Stokes, Forrest ponder Apache

Apache's Varanus Island project

Billionaires Andrew Forrest and Kerry Stokes are understood to have joined the race to buy Apache's WA gas business as they battle front runner Woodside Petroleum for the spoils.

Industry sources say Mr Stokes' Seven Group Holdings has teamed with US private equity giant KKR, continuing a long-standing relationship between the two dating back to their joint ownership of the Seven Network. It is unclear whether they have already lodged a bid with Apache.

The Forrest-controlled Fortescue Metals Group, meanwhile, is understood to be part of a consortium led by Macquarie Group and including WA's biggest industrial gas user, Alcoa.

None of the bidders involved would yesterday confirm their interest in the Apache assets, which analysts expects to fetch at least $2.5 billion.

_WestBusiness _first revealed Woodside's interest in August.

There are reports Woodside, which is desperate to secure more oil and gas production to offset a lack of medium-term organic growth, is considering a knock-out bid of more than $4 billion. However, there has also been industry chatter Woodside's initial approach to Apache was a low-ball offer, which was rejected outright and sparked tension between the two camps.

Seven Group is gradually building up an oil and gas business with onshore assets in the US and a pitch to secure Nexus Energy. The acquisition of Apache's WA unit, which includes the Varanus Island and Devil Creek gas hubs as well as a stake in the Chevron-led Wheatstone LNG project, would transform Seven Group under chief executive Don Voelte's reign.

Fortescue and Alcoa's motivation to own the Apache assets is driven by their struggle to secure long-term gas supplies at below market prices for their respective Pilbara iron ore and South West alumina operations.

Adding to the intrigue is that Alcoa is seeking more than $100 million in damages over the 2008 Varanus Island explosion that crippled WA's gas supply.

Apache's WA joint venture partner Santos is also evaluating its options, though not expected to join a high-priced bidding war.

Apache has told its investors it hopes to conclude its WA exit by June though sources close to the process have questioned whether the timetable can be met.

The WA exit is part of a shareholder-triggered repositioning by Apache from global player to onshore US-focused specialist.

To achieve its aim and placate restless investors, Apache needs to also withdraw from Egypt, where it is in a joint venture with Sinopec, and the North Sea. But it is understood Apache is struggling to sell its North Sea unit because of attached liabilities, which may put an end to its overall strategy of a piecemeal exit from its non-US positions.