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Royal Dutch Shell’s £47bn swoop on BG Group faces potential stumble over asset ownership

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By LAURA CHESTERS FOR THE DAILY MAIL

Screen Shot 2015-04-08 at 08.12.04Royal Dutch Shell’s swoop on BG Group will face a series of hurdles including competition fears and questions over the ownership of some of its newly acquired assets.

The £47billion acquisition of BG will make Shell the largest foreign oil company in Brazil – but there are concerns about its assets in the South American nation.

One of Shell’s main reasons to pounce on BG was its large holdings in Brazil. But many of the assets there are owned through joint ventures, which gives the partners first refusal to buy BG’s share in the projects if it is taken over.

This clause, called pre-emption rights, could derail one of the main motives for the deal.

BG’s partners in lucrative exploration blocks are Petrobras and Repsol Sinopec Brasil.

Experts predict Petrobras, which is facing a bribery scandal at home, will not be keen to exercise its right to buy BG’s stake due to a lack of funds.

Shell already has partnerships with Petrobras in other areas of the world.

But there are worries that Chinese state-controlled Sinopec could mount a bid for BG’s stakes.

There could also be pre-emption rights in relation to BG’s stake in Karachaganak, a field in Kazakhstan, a less-strategic location for Shell.

The mega-deal also faces a host of regulatory obstacles, likely to include competition probes.

Shell chief executive Ben van Beurden acknowledged this week that the takeover will face scrutiny in countries including Australia, Brazil, China and the EU.

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