Manufacturers wary of Shell’s proposed takeover of BG Group

The competition watchdog has begun to examine Royal Dutch Shell's proposed $90 billion takeover of BG Group, amid fears it could be bad news for local manufacturers.

As the AFR reports, if it were to go ahead, the acquisition would further concentrate the ownership of gas resources in Queensland. Currently, Shell owns 50 per cent of the Arrow gas venture with PetroChina, and BG owns QGC.

Industrial chemicals maker, Incitec Pivot has voiced concern about the acquisition. The company’s managing director James Fazzino said last month he will tell the Australian Competition and Consumer Commission (ACCC) that the industry does not need any more consolidation.

And last month lobby group Manufacturing Australia cliamed rising gas prices could result in the loss of as many as 83,000 manufacturing jobs.

The ACCC is also conducting a broader inquiry into the East Coast gas market.

“We are undertaking extensive industry stakeholder consultation to understand better the reasoning behind claims about particular market behaviours or about shortcomings in the market,” ACCC chairman Rod Sims said at the Energy Networks Association Gas Seminar in Melbourne last week..

In outlining the scope of the ACCC’s inquiry, Sims said there is significant change occurring in domestic gas markets given the extraordinary developments with LNG export projects.

“There is a range of potential contributing factors that may be exacerbating the current uncertainty pervading the gas market,” Sims said.

“The inquiry will test the veracity of these claims and seek hard evidence that either supports or disproves them.”

He also called on industry participants to provide their views on market information and transparency.