Shell’s $70 billion takeover of BG Group could face opposition from China’s antitrust authorities that have previously challenged natural resource deals on competition.
As Bloomberg reports, Shell’s chief executive officer, Ben Van Beurden travelled to China in an attempt to convince the authorities that the forming of an LNG giant does not put the country at risk.
Gordon Kwan of Nomura International said that Shell and BG Group might well have to shed some stake in their LNG projects in Australia that will export liquefied natural gas to China, in order to gain antitrust approval.
Shell believes the deal is pro-competitive and expects to gain all necessary approvals following a thorough and professional review by the authorities.
According to Jonathan Stern head of the natural gas program at the Oxford Institute for Energy Studies , China is most likely to ask for concessions as the country does not favor such market powers. One scenario could be the limiting of volumes delivered to China from Shell’s and BG Group’s portfolios, as it is in China’s interest to protect domestic companies and industry.
Voices from Brazil, Australia and Kazakhstan have so far been positive, as Van Beurden added that the antitrust process is still in an early stage. The antitrust approval process for Shell’s acquisition of BG Group could take at least 6 months as Peter Wang from Jones Day law firm told Bloomberg.
The completion of the Shell-BG merger is not expected until early 2016.
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LNG World News Staff; Image: Shell