Shell received approval from Australia’s Foreign Investment Review Board for its planned merger with BG Group on Thursday. The board approval was an important step for the merger, as both BG and Shell have interests in gasfields in eastern Australia.

Shell-BG merger gets go-ahead from Australian board

Australia

THE HAGUE, December 3, 2015 – Shell received approval from Australia’s Foreign Investment Review Board for its planned merger with BG Group on Thursday. The board approval was an important step for the merger, as both BG and Shell have interests in gasfields in eastern Australia.

The $70-billion takeover will add 25 percent to Shell’s proven oil and gas reserves of 13 billion barrels of oil equivalent. BG operates the Queensland Curtis LNG Project, the output of which reached 100,000 boe per day in July.

The feasibility of the merger was in doubt amid a lack of support from investors and the persistent low oil price environment, which Shell cited as the reason for its third-quarter losses.

The merger will also make Shell the biggest player in offshore Brazil and global LNG production, improving the company’s medium-term outlook despite obstacles. Shell CEO Ben van Beurden said the company was on track to complete the merger in the beginning of 2016.

Shell indicated in its April 2015 offer for BG that it assumed oil prices would climb back up to $90 per barrel by 2020, sparking skepticism that the merger plan would not bear fruit if the oil price recovery was slower and longer.

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