MELBOURNE, Australia-Australia’s antitrust regulator has again deferred a decision on Royal Dutch Shell PLC’s planned takeover of BG Group PLC, raising concerns about competition and the supply of natural gas to the domestic market.
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“The ACCC is concerned that, by aligning Shell’s interest in Arrow Energy with BG’s LNG facilities in Queensland, the proposed acquisition may change Shell’s incentives such that it will prioritise supply to BG’s LNG facilities over competing gas users“, the ACCC’s chairman Rod Sims said in a statement.
Energy producer BG Group is developing Queensland Curtis LNG (QCLNG) through its Australian arm QGC, with the company claiming a world first at turning gas from coal seams into LNG. Browse Splash 24/7 for more maritime and shipping news.
Wholesale gas prices in Australia are forecast to double over the next two years as a significant amount of the supplies in eastern Australia are committed to the export market, Australia & New Zealand Banking Group said in a July report.
“Arrow and QCLNG collaboration could assist the development of Arrow’s undeveloped resources to potentially accelerate additional gas supplies into both the domestic and export market”, Shell noted.
Arrow had been looking to build its own LNG plant, but this project has been dogged by delays and has currently stalled. The second came earlier in September when the European Commission waved the deal through after a brief investigation, leaving China’s competition authority and Australia’s antitrust and foreign-investment regulators still to be cleared. It has also been approved by competition authorities in Brazil and the U.S. Shareholders still need to vote on the deal and are expected to receive formal documents late this year or early next year. Local gas buyers such as fertilizer maker Incitec Pivot Ltd. have worried about a supply shortage and surging prices, with Shell’s proposed purchase of BG adding to concerns. The gap-known as the arb spread-serves as an indicator of what traders stand to make when investing in an acquisition target ahead of a deal’s completion.
Oil prices have plumbed fresh lows in the past month, with Brent crude, the international benchmark, falling as low as $42 a barrel.
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“This burst in demand for gas over a very short time frame for the LNG industry is effectively upending the east coast gas market”, Sims said in a speech at a gas conference on Thursday, outlining the commission’s preliminary impressions on a review of the east coast gas market due in April 2016. Particularly during 2012-2014 it was hard to find signs of an effective domestic gas market, Mr. Sims said.
