Shell negotiating mega merger with BG Group

Noam Stiekema

The oil and gas industry might face new mega-merger. The energy company Royal Dutch Shell and British gas producer BG Group negotiate a merger, confirmed on Tuesday evening BG Group. Ingestion of BG Group by energy giant Shell will be the first mega-merger in the industry for more than ten years. The negotiations are at […]

Shell

ShellThe oil and gas industry might face new mega-merger. The energy company Royal Dutch Shell and British gas producer BG Group negotiate a merger, confirmed on Tuesday evening BG Group. Ingestion of BG Group by energy giant Shell will be the first mega-merger in the industry for more than ten years. The negotiations are at an advanced stage, said BG Group. However, still can not say unequivocally whether the negotiations will lead in the end to actually proposed merger. Until 5th May 2015 Shell should explain whether it wishes to make an offer or not, specify BG.

Because of the collapse of oil prices in the market environment is such a state, since the beginning of 2000, when the industry led to numerous mega-merger. Because of the boom in shale gas in the US and dictated by Saudi Arabia, OPEC decision not to limit the extraction of oil, the price of crude oil shrank by half since last summer. In such difficult economic conditions ten years ago happen acquisition of Amoco and Arco by BP, Exxon acquired Mobil, and Chevron merged with Texaco. BG is under pressure for months: declining gas reserves in Egypt and lower oil prices cause serious problems for the company. The fall in oil prices, it sold its gas pipelines in Australia last year. The company has set itself ambitious targets, however growth. It operates a number of multi-billion USD projects in Brazil, East Africa, Australia, Kazakhstan and Egypt.

British company is estimated at about 42.5 billion EUR, while Shell has a market capitalization of 186.5 billion EUR. The merger will reduce the backlog of Shell’s industry leader ExxonMobil, which is estimated at around 330 billion EUR.

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