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Australia throws spanner in the works for Shell’s takeover of BG Group

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by Sarah Spickernell

Royal Dutch Shell’s takeover of rival BG Group has been postponed, after Australian regulators voiced concerns about the potential impact on domestic gas supplies.  

In a statement today, Rod Sims, chairman of the Australian Competition and Consumer Commission (ACCC), claimed the deal was not in the best interests of Australian consumers, as it might result in a greater proportion of east coast supplies being exported.  

He said: 

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.

The commission has not completely ruled out the deal, but said it would not make its final decision until 12 November.  

Read more:  Royal Dutch Shell expects to save “billions” through BG Group deal 

Shell owns 50 per cent of Arrow Energy, which could sell its gas into BG’s Queensland Curtis liquefied natural gas plant if a deal goes ahead. This gas would then be exported, leaving less available for domestic use.  

Shell struck the £45bn deal to takeover BG Group, which will raise its oil and gas revenues by a quarter and boost production by 20 per cent, in April.  

Read more:  Royal Dutch Shell share price soars as it confirms 6,500 job cuts while £47bn takeover of BG Group “progresses well” 

But to go ahead, the huge acquisition must receive approval from competition authorities around the world. The US and Europe have already given it the green light, but Australia and China must also be satisfied for the deal to be finalised.  

Shell’s share price was knocked slightly by today’s news, down 0.45 per cent at £16.64 at pixel time. 

BG’s share price fared slightly better, fluctuating around yesterday’s close value. 

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