Royal Dutch Shell PLC’s US$70 billion deal to buy BG Group PLC was cleared by Australia’s competition watchdog despite concerns it could reduce natural-gas supply to local customers and boost prices.
“The proposed acquisition would be unlikely to substantially lessen competition in the wholesale natural gas market,” Australian Competition and Consumer Commission Chairman Rod Sims said in a statement yesterday.
Shell’s takeover has already won key regulatory approvals from the US, the EU and Brazil.
The Australian decision is a “major step forward” for the transaction, Shell said. The deal still requires clearance from China’s antitrust regulators and is on track to be completed in early next year, the company said.
The Australian regulator’s approval comes amid a broader review of the gas market on the country’s east coast as local buyers such as Incitec Pivot Ltd express concerns about a supply shortage and surging prices.
The competition watchdog said in September the transaction might weaken the incentive for Shell’s Arrow Energy venture with PetroChina Co (中石油) to feed gas to the domestic market.
“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,” Shell chief executive officer Ben Van Beurden said in a statement.
Shell said earlier this month that its takeover of BG is to deliver value to investors even in a prolonged oil industry downturn. Europe’s biggest oil company is to save an additional US$1 billion in operating costs from the combination with BG, bringing the total estimate of synergies from the deal to US$3.5 billion, Shell said at the time.
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