The £47bn strategy Shell has embarked on with the aim of becoming the biggest oil manufacturer in the world has taken a step nearer to fruition, as its plans to purchase BG Group are submitted to competition regulators in Brazil.
This would represent the second largest such deal ever within the lubricants sector, but Shell still needs to secure the go-ahead from several global regulators before it can press on with the takeover.
Among the bodies that industry sources have suggested may present a problem are Brazil’s Administrative Council of Economic Defence (CADE) and the Ministry of Commerce (Mofcom) in China, in addition to regulatory authorities in Europe.
However, both firms have stated that the aim is to complete the takeover during the initial quarter of next year, demonstrating confidence that Mofcom will approve the deal.
Anna Howell, from Herbert Smith Freehills, stated:
“BG is a big supplier of gas to China and Mofcom will likely be concerned about the impact on imports of LNG into China and will look at the combined Shell portfolio into China.”
Despite the need for Mofcom approval, it is Brazil that is central to the interest Shell has in BG. Its chief executive indicating that, following takeover, Shell would be able to produce 550,000 barrels per day from that country by the close of the decade.
The oil giant is already a dominant force within its industry, thanks to products like Shell Gadus S2 V100 3, but a production increase on this scale would move it further ahead.