The oil and gas enterprises Shell and BG Group have just sealed what happens to be the third biggest deal ever in the sector in regard of company value. Anglo-Dutch Shell is buying British rival BG Group for GBP 47 billion, which is equivalent to USD 70 billion in the current exchange rate.
Such move will make Shell the leading foreign oil company in Brazil according to Jefferies analysts, who said BG’s production is set to increase to 557,000 barrels a day by 2020 from 144,000 in 2015. BG has non-operating stakes in five blocks in the pre-salt. In addition to that, Shell holds a 20-percent stake of the giant offshore Libra field, also part of the Brazilian pre-salt.
The acquisition will boost Shell’s oil and gas reserves by 25%, including offshore projects in Australia and Brazil. The consultancy firm Wood Mackenzie said BG’s large position in the deep waters off of Brazil were likely the most attractive target for Shell.
Furthermore, the acquisition will also give Shell a bigger presence in the fast-growing LNG market, in which both companies are already big players. The combined company will be the biggest LNG producer in the world, with a strong portfolio of as-yet undeveloped assets in East Africa and Australia.
The LNG market has been wired especially by China and India, which strive to shift to less polluting energy sources than coal and oil, and by Europe’s efforts to find alternatives to Russian gas.