PERTH (miningweekly.com) – The Australian Competition and Consumer Commission (ACCC) this week said that it would not oppose Royal Dutch Shell’s $70-billion takeover of BG Group.
The ACCC approval is one of five regulatory clearances required for the takeover offer, of which two still remain outstanding, including Foreign Investment Review Board approval and approval from China’s Ministry of Commerce.
Shell in April announced plans to gain control of BG Group’s Queensland Curtis liquefied natural gas (QCLNG) project in Gladstone, which turns gas from coal seams into LNG. The $20-billion project loaded its first LNG cargo at the end of December last year. Production at QCLNG would plateau at eight-million tonnes a year by 2016.
“The ACCC’s view is that the proposed acquisition would be unlikely to substantially lessen competition in the wholesale natural gas market, in either Queensland or eastern Australia more broadly,” ACCC chairperson Rod Sims said.
Sims said that the ACCC had considered whether the proposed acquisition would reduce the supply of gas, or reduce competition to supply gas, to domestic customers by aligning Shell’s interest in Arrow Energy with BG’s LNG facilities in Queensland.
“The ACCC concluded that as Arrow is not currently focused on supplying domestic customers, and appears unlikely to be so in the future, aligning Arrow with an LNG operator would not change competition for the supply of gas to domestic customers.”
The ACCC also considered whether the proposed acquisition would be likely to lessen competition for the supply of gas to domestic customers by removing the potential for competition between Arrow and BG.
“While recognising the current high degree of uncertainty about the future development of the industry, the ACCC considers that BG’s focus is on supplying the QCLNG facilities. A key issue was whether, in the absence of the proposed acquisition, BG and Arrow would both have excess gas above their LNG commitments and whether they would offer that gas to domestic customers,” Sims said.
“However, there is too much uncertainty about the amount and timing of 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.”
During its review, the ACCC received a large number of submissions from market participants concerned about the competition effects of the proposed acquisition and the current state of the east Australian gas market.