Australia competition watchdog clears Shell’s $70 billion takeover of BG Group

Shell-BG merger has received approval from the USA, European Union and Brazilian anti-trust regulators.

The takeover would mean multinational Shell would own its existing 50% stake in the now shelved Arrow Energy LNG project and BG Group’s QCLNG project in Gladstone.

The merger’s latest hurdle, the Australian Competition and Consumer Commission (ACCC), was asked to see if it could find any issues with reduced competition in Australia’s domestic LNG market connected with the deal.

“The Shell BG combination is a sign of Shells confidence in the Australian economy”.

According to Mr. Sims, as Arrow Energy’s core operations did not involve supplying gas to the local customers, the deal is not likely to affect the competition level in the industry.

The regulator has been holding a year-long inquiry into east coast gas markets after complaints from gas users about an opaque trading market and lack of competition.

ACCC said that the deal would not change the dynamics of the domestic market.

“I don’t think that’s in the national interest, I think it’s in the national interest that this gas gets developed quickly”.

“The addition of BG’s integrated gas assets in Australia to Shell’s global portfolio is one of the main strategic drivers behind the recommended combination”, he said.

The decision of ACCC came just a few days after Jemena Northern Gas Pipeline Pty Ltd. agreed to build $570 million natural gas pipeline in Queensland. Earlier this month, Shell said that it is expecting cost synergies from the merger to increase by $1 billion to $3.5 billion.

The acquisition will make Shell the world’s top LNG trader, although it still needs approval from China and Australia’s Foreign Investment Review Board to go ahead as planned in early 2016.

In September, the commission deferred a decision on the deal in order to gather more information after receiving a number of submissions from businesses anxious that Shell would curb local supply in favor of more lucrative exports to Asia through BG’s liquefied natural gas terminal on the east coast.

He wasn’t able to offer any assurances to gas buyers that the inquiry would result in more competitive supplies of gas but said the regulator was well aware of the problems.