4 September 2015

ACCC defers decision on Shell’s takeover of BG

Australia’s competition watchdog has given itself more time to consider Royal Dutch Shell’s planned takeover of UK-based oil-and-gas firm BG Group.

Australia and China are the two regulatory hurdles yet to be cleared after Europe’s highest antitrust regulator approved the deal unconditionally overnight (AEST).

The Australian Competition & Consumer Commission was due to announce its decision on the deal today, but in a notice on its website said the date had been pushed back to September 17 to allow additional time to consider the proposal.

Shell and BG agreed the $US70 billion cash and share deal in April and Australia’s regulator began its review on June 11, focusing in particular on competition between the companies, the effect a tie-up would have on prices, and how easy it would be for existing competitors to expand or new competitors to enter the market following a merger.

The ACCC, while preparing for its review, had noted the companies overlap in areas including the production and wholesale supply of natural gas in eastern Australia.

BG has gas fields and production facilities in the Surat Basin and a majority interest in supplying gas to the $US20.4 billion QCLNG liquefied natural gas development in Queensland, plus exploration rights in the Bowen and Cooper Basins.

Shell, through its Arrow Energy joint venture with PetroChina, is looking at options to sell gas from coal seams in Queensland, sells gas through a venture with AGL Energy, plus is involved in a number of gas exploration and production projects in Western Australia

The European Commission concluded after a brief investigation that the deal wouldn’t allow Shell to influence the prices of oil and natural gas in Europe, and that those markets would remain competitive.

Shell’s chief executive, Ben van Beurden, said the EU’s decision kept the companies on track to close the merger in early 2016, as planned. Shareholders still need to vote on the deal and are expected to receive formal documents late this year or early next year.

US antitrust authorities approved the deal in June and Brazil’s competition authority gave its approval in July.

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