The European Commission approved Royal Dutch Shell and BG Group merger. It is the biggest acquisition transaction made during the 21th century.
Royal Dutch Shell and BG Group came to an arrangement on merger in April 2015. The next challenge for them was to get approval from the European Commission. The main concern was about probability of oil and gas market monopolization by UK-Netherlands company.
The aim of such deal is to get expanded access to the significant oil and gas reserves. It offers an opportunity for Shell to spare funds, which company would have to expend for new gas- and oil-field exploration.
This deal gained clearance by the European Commission in September 2015 and is estimated at approximately $70 billion. The transaction is expected to be closed in 2016. It is practically the biggest one made during the 21th century, and this bargain is struck in the conditions of growing competition.
Royal Dutch Shell purchases the company, which is perfectly adapted to implementation of activities under such circumstances, says Helge Lund, chairman of BG Group. He also started to work at BG after having left his leading position in Norwegian Statoil saying it was a high time for development.
The European Commission arrives at the conclusion that united company of Royal Dutch Shell and BG Group market share would remain limited in the field of oil and gas exploration and wholesale distribution.
The Commission also states that this transaction will not let Shell make impact on prices. Consequently, prices will remain competitive. Moreover, the deal will permit Shell to improve its infrastructure and ramp up is production of liquefied natural gas. Nevertheless, many big companies will keep conducting their activities on the oil and gas market.
Another opportunity given to Royal Dutch Shell by acquisition of BG group is that Anglo-Dutch company will be able to develop unconventional gas sources placed in Australia and solidify in Brazilian seaboard.
BG Group has previously executed a contract with oil company KBR to sign an alliance. It aims to reduce expenses and to increase its capability to produce competitive gas and oil products. This deal, made in January 2015, also includes hiring of high-skilled employees for the purposes of the both companies’ shared projects.
Royal Dutch Shell is a common Anglo-Dutch transnational oil and gas corporation, most known as Shell. It conducts hydrocarbon extraction and conversion in more than 40 countries. It was founded as a result of Royal Dutch Petroleum and UK-based Shell Transport and Trading. Nowadays it is one of the five world biggest oil and gas companies.
BG Group is a British transnational oil and gas company, which conducts its activities in 25 countries all over the world and is one of the biggest in the United Kingdom. Company’s focus is on exploration of natural gas and production of liquefied gas, its distribution and production of electric power.
