LONDON (Alliance News) - The Australian Competition and Consumer Commission on Thursday raised concerns about the proposed takeover of BG Group PLC by Royal Dutch Shell PLC, throwing a spanner into the works of the USD47 billion deal between the two blue-chip oil and gas companies.
Rod Sims, the chairman of the Australian competition authority, said the body is concerned that, by aligning Shell's interest in Arrow Energy with BG's Queensland-based liquefied natural gas facilities, the proposed acquisition of BG "may change Shell?s incentives such that it will prioritise supply to BG?s LNG facilities over competing gas users".
"As a result, Shell could choose to direct more (and possibly all) of Arrow?s large gas reserves towards meeting BG's contracts to supply LNG export markets. This would remove some or all of Arrow?s gas from the domestic market," Sims added.
Sims said Arrow currently has the largest quantity of uncommitted gas reserves in eastern Australia, and he said there was a limited number of other potential suppliers to the domestic market. "If the proposed acquisition resulted in less supply of gas to the domestic market, therefore, this could substantially lessen competition to supply domestic gas users and lead to higher domestic prices and more restrictive contractual terms," he said.
The ACCC said it has received a "large number" of submissions from market participants about the possible competition effects of the Shell-BG deal. It has invited further submissions to be made by October 8 and said that, due to this, its final decision on the deal will be delayed until November 12.
The deal also is still awaiting regulatory approval in China, but has already secured passage from European Union and Brazilian competition authorities.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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