Shares in Woodside Petroleum Ltd., Australia's second-biggest oil and gas producer, rose for a second day on gains in crude-oil prices and a report examining the merits of a merger with BG Group Plc.

The stock of the Perth-based company, which operates the North West Shelf liquefied natural gas venture and is 34 percent owned by Royal Dutch Shell Plc, today jumped as much as 79 cents, or 1.8 percent, to A$45.31 on the Australian Stock Exchange, their highest for almost 11 months. The shares, which gained 4.3 percent yesterday, were at A$44.84 at 3:03 p.m. in Sydney.

New York crude-oil futures have gained 3.4 percent since the June 12 close on concerns that U.S. gasoline stockpiles may be insufficient to meet peak-season demand. A share exchange between Woodside and BG, the U.K.'s third-largest gas producer may yield a merged company that ``could realistically aspire to take the role of global LNG leadership,'' Cazenove Group, a closely held U.K. bank, said in a summary of a June 12 report.

``I can see the merit in a merger but it would be a massive logistical exercise to put the two together,'' said Grant Craighead, a resources analyst at Stock Resource in Sydney. ``At the same time you've got the oil price creeping up and the whole energy sector is making gains.''

Woodside has a policy of not commenting on market speculation, said Roger Martin, a spokesman in Perth.

It may be in the interests of Shell, Woodside's largest shareholder, to encourage a merger of Woodside and Reading, England-based BG, as that may increase the value of Shell's investment and help dispel fears that Shell may one day bid for BG, Cazenove said in the report summary.

Shell Blocked

Shell had a $3.2 billion bid for control of Woodside blocked in 2001 by Australian Treasurer Peter Costello, who cited national interest grounds.

Woodside is interested in entering the Atlantic Basin LNG market, where BG operates, Chief Executive Officer Don Voelte said in an interview in April. It may consider swapping a stake in an LNG project in Asia for assets in the faster-growing Atlantic LNG market, he said.

A trade of a stake in Woodside's proposed Pluto LNG project in Western Australia for a share in a project or asset held by an Atlantic region LNG producer such as BG may make sense, Frank Harris, co-head of global LNG at Edinburgh-based Wood Mackenzie Consultants Ltd. said then.

LNG is natural gas chilled to liquid form for transportation by tanker to destinations not connected by pipeline.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net .