(Corrects paragraph 4 to say the proposed acquisitionpreviously received U.S. green light, not BG)
By Ron Bousso and Stephen Eisenhammer
LONDON/RIO DE JANEIRO July 8 (Reuters) - Brazil gave thegreen light to oil major Royal Dutch Shell to buysmaller rival BG, advancing the $70 billion merger -- thelargest of the past decade -- closer to completion in early2016.
Shell is set to become the largest foreign operator offshoreBrazil after it buys BG, so the clearance from the country was acrucial step to complete the merger on time.
Brazil's competition authority CADE said on Wednesday it hadgiven preliminary approval to the transaction "withoutrestrictions." BG said that if no appeals were lodged orreferrals made in the next 15 days, CADE's clearance wouldbecome final. A spokesman for Shell confirmed the approval andthe 15-day appeals period.
The proposed acquisition had previously obtained a greenlight from United States Federal Trade Commission (FTC) and nowonly needs pre-conditional approvals from the European Union,Australia and China for the merger to go ahead.
"The filing process for each of these is under way, and thetransaction is on track to complete in early 2016," it said.
Shell and BG produced a combined 212,252 barrels of oilequivalent per day in Brazil in May, or 7.1 percent of thecountry's total. Analysts expect this figure to double to nearly500,000 boepd by 2020.
The two companies have stakes in Brazil's most exciting oilplays, with BG owning 25 percent of the massive Lula field andShell owning 20 percent of the Libra prospect.
The deal comes as Brazil's state-run oil company PetroleoBrasileiro SA is battling with a massive corruptionscandal, heavy debt load and lower oil prices. The company,which is the operating partner in BG and Shell's key offshoreprojects, is scrambling to sell assets to pay off debts andallow it to invest in ouput growth.
Brazil, itself on the verge of its deepest recession in aquarter century, is keen to ensure new production from giantoffshore fields is not hindered by the scandal, which led to 23implicated service companies having their payments frozen andbeing banned from bidding for new work.
Shell's purchase of BG, which followed the near halving ofoil prices over the past year, was expected to spark a flurry ofmergers and acquisitions in the energy industry, but so far fewdeals have been announced. (Reporting by Ron Bousso, writing by Dmitry Zhdannikov; editingby Louise Heavens and Christian Plumb)