The war of words between BG Group of Britain and Australia's Origin Energy flared up again today as the two energy companies disputed the value of BG's £6.55 billion cash bid for Origin, the coal seam gas producer.

Origin accused BG of trying to buy it on the cheap and told its shareholders to reject the proposal from the UK-based oil and gas explorer. But BG said Origin’s response lacked “any substance or clarity” and had failed to provide evidence to back its view that BG’s offer undervalued the company.

BG wants to buy Origin to expand its presence in the region and bolster its assets in coal-seam gas (CSG) — methane gas trapped underground in deep coal seams by water.

However, Origin believes the potential value of its coal seam gas reserves could be much higher than BG is offering and has shortlisted several candidates to develop joint ventures to accelerate the "monetisation" of the reserves.

It has short-listed a number of projects from major players in the energy industry, each of which has proposed a liquefied natural gas plant using the coal seam gas.

Origin did not reveal the identity of the shortlisted candidates but bankers have suggested Royal Dutch Shell, BP, ConocoPhillips and Chevron Corp.

Origin has said that its CSG reserves could be worth A$9.8 billion (£4.57 billion), using recent CSG deals as benchmarks.

But BG hit back, saying that Origin's statement failed to "demonstrate any confidence that the coal seam gas "monetisation" will yield superior value for its shareholders."

Frank Chapman, chief executive, said: “Whilst equity markets and energy prices decline, and coal seam gas companies’ share prices fall, Origin is telling its shareholders to wait for an uncertain and unclear outcome from its monetisation process and reject the certain value of BG Group’s all-cash offer.”

He added: "Origin has provided scant detail on the company's development plans, is silent on the capital requirements and fails to specify the considerable risks inherent in the as-yet undefined alternative."

BG launched a hostile bid in July after an agreed deal was rejected by Origin at the last minute. The cash offer is at a 47 per cent premium to Origin’s closing share price on April 29, before the move was announced.

Origin changed its mind after details emerged of a deal between Malaysia’s national oil company Petronas and Australian oil and gas producer Santos. The partnership to build a liquefied natural gas (LNG) plant using coal seam gas set a new benchmark for valuing those resources, analysts said.

Some analysts have said BG, the UK's third-largest oil and gas producer, may have to raise its bid by 10 per cent.

BG is planning an A$8 billion LNG project in northeastern Australia with Queensland Gas and hopes that buying Origin would boost reserves and help expand the proposed plant.

Origin has more than 2.7 million power customers in Australia, New Zealand and the Pacific alongside its exploration and production activities. It has around 3,000 staff and was demerged from Boral, Australia’s biggest construction and building materials firm, in 2000.

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