Shell, BG Merger Faces Roadblock
The Australian Competition and Consumer Commission (ACCC) has raised concerns that Royal Dutch Shell's proposed $70 billion takeover of BG Group may lessen gas supply competition in eastern Australia and delayed a final decision on the bid to November.
The competition watchdog said, after preliminary investigations, the proposed takeover could damage the interests of east coast and Queensland gas users and force up prices.
ACCC said a large number of market participants had expressed concerns that the proposed takeover may lead Shell's Arrow Energy to sell its gas into BG's Queensland Curtis liquefied natural gas plant (QCLNG) for export.
UK-based BG owns the $24 billion Queensland Curtis LNG project, which started exports early this year, while Shell owns 50 per cent of the Arrow Energy venture, the holder of the largest chunk of known, undeveloped gas reserves on the east coast.
Some of Australia's biggest manufacturers fear Shell's takeover of BG could worsen what they see as a lack of competition in the country's eastern gas market, spurred by three new LNG export plants, including BG's, in Queensland.
Shell downplayed the ACCC’s concerns, saying it had access to enough gas to support both its LNG export and domestic supply commitments.
The delay in Australia illustrates how large deals covering operations in several countries can get bogged down in local concerns
The proposed takeover, announced in April, is still awaiting approval from regulators in China and Australia. It has already been approved by the European Commission and authorities in the US and Brazil, where BG Group has its most promising assets in giant offshore fields in the Santos Basin.