FMG diversifies into oil and gas

Fortescue Metals Group appears to be diversifying its iron ore operations, buying a stake in an oil and gas company.

FMG will become a cornerstone investor in the Melbourne-based company, Oil Basins, which operates in WA's Canning Basin.

The investment is worth $4.2 million dollars and represents an 18 per cent stake in the company via a placement of new shares.

Oil Basins says the funds will support the development of its Canning Basin assets.

It is FMG's first investment in the oil and gas sector.