Shell-BG merger clears penultimate hurdle

Royal Dutch Shell's US$70bn takeover of BG Group cleared one of its last regulatory hurdles when Australia's Foreign Investment Review Board (FIRB) said it would not stand in the way of the deal.

Thursday's announcement comes two weeks after the acquisition was authorized by Australia's competition authority.

The companies still need the backing of China's ministry of commerce for the merger to go ahead.

"I am very pleased to receive this news," Shell CEO Ben van Beurden (pictured) said in a statement. "The FIRB approval is an important step towards deal completion.

"The addition of BG's integrated gas assets in Australia to Shell's global portfolio is one of the main strategic drivers behind the recommended combination.

"The Shell-BG combination is a sign of Shell's confidence in the Australian economy. It is also a springboard to change Shell into a simpler, more profitable and resilient company. We remain on track to complete the deal in early 2016."

FIRB said its approval carried the condition that Shell undertake a "co-operative compliance approach" to taxation for BG's coal seam gas business, QGC, in Queensland.

The deal will align Shell's interest in Arrow Energy – a joint venture alongside PetroChina – with BG's liquefied natural gas (LNG) facilities in Australia's northeast.

Apart from strengthening Shell's global LNG position, the merger will turn the company into Brazil's leading foreign oil and gas producer – surpassing Statoil and Repsol-Sinopec.

BG's Brazil portfolio includes stakes in five pre-salt discoveries in the Santos basin and operating rights for 10 blocks in the Barreirinhas basin.

The new company's Latin America assets will also include oil and gas blocks in Bolivia, Trinidad and Tobago, Uruguay, Honduras and Colombia.