East coast gas buyers Royal Dutch Shell has won unconditional approval from the competition regulator for its $US70 billion takeover of BG Group, in a decision that is set to heighten concerns among east coast gas buyers that more gas will be sent offshore.
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After a lengthy review, the Australian Competition and Consumer Commission said Thursday it didn’t believe the planned acquisition would substantially lessen competition in the wholesale gas market.
Arrow holds largest uncontracted gas reserves in eastern Australia through its leases in the Surat and Bowen Basins, while BG also holds large reserves in adjacent fields in Queensland, as well as the Cooper Basin, through its subsidiary QCG.
The regulator said it had received a large number of submissions from market participants concerned about the competition effects of the proposed deal.
“There is too much uncertainty about the amount and timing for future gas supplies for the ACCC to be satisfied that Arrow and BG would be meaningful competitors in the domestic market in the absence of the acquisition”.
Arrow was not now supplying domestic customers and appeared unlikely to do so in the future, so aligning it to supply BG’s LNG plant would change nothing, Sims said.
Several interested onlookers had urged the watchdog to consider forcing the combined entity to make more gas available to the domestic market, but the ACCC said such undertakings could not be requested given it ruled there was no significant impact on competition.
Shell’s takeover of BG, the biggest deal in the global energy sector in a decade, was first announced in April, after crude oil prices almost halved to below $US50 a barrel, amid rising supplies and lacklustre demand. The two remaining pre-conditional clearances are from Australias Foreign Investment Review Board (FIRB) and Chinas Ministry of Commerce (MOFCOM).
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BG Group noted that the approval was one of the five regulatory clearances required.
