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ACCC kicks of inquiry into Shell’s BG Group takeover

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ACCC kicks of inquiry into Shell’s BG Group takeover

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Angela Macdonald-SmithEnergy Reporter:Published 12 June 2015

The national competition watchdog has kicked off an examination of Royal Dutch Shell’s proposed $90 billion takeover of BG Group, with the focus set to land on the impact of further consolidation on the east coast market where manufacturers are already struggling to source long-term supplies.

Incitec Pivot managing director James Fazzino has already declared he will voice his concerns over the mammoth deal to the Australian Competition and Consumer Commission, noting last month that “the industry doesn’t need more consolidation.”

The inquiry into the proposed acquisition, which got under way on Thursday, comes as the ACCC is already carrying out a broader examination of competition in east coast gas supply amid complaints by manufacturers on pricing and availability.

Industrial gas buyers are facing a doubling of prices or more as they seek to renew contracts, after wholesale prices surged from historical levels of around $3.50 a gigajoule.

Shell’s planned acquisition of BG would result in a major amalgamation of gas resources in Queensland, where Shell owns 50 per cent of the Arrow gas venture with PetroChina, while BG owns QGC.

Both ventures are large suppliers of coal seam gas into the Queensland market, and the takeover is expected to result in Arrow’s uncontracted CSG resources being directed into QGC’s LNG export project in Gladstone.

In its broader scrutiny of the east coast gas market, the ACCC has advised it will seek views of industry about competitiveness. 

ACCC chairman Rod Sims said on Friday the regulator was prepared for a huge task in the inquiry.

“The ACCC is well placed to investigate and assess any structural or other issues in the gas market that limit competition or prevent the gas market working as expected,” Mr Sims told a conference in Melbourne.

The ACCC is accepting submissions on the Shell-BG deal until July 2 and said it expected to announce either a final decision or release a statement of issues on the transaction on September 3.


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