Royal Dutch Shell Buys BG Group in $70B Takeover
In April 2015, Royal Dutch Shell announced that it has agreed to purchase BG Group for almost USD$70 billion. This strategic move by Royal Dutch Shell
challenges rival Exxon Mobil’s top spot in the liquefied natural gas industry. The BG Group
currently exists as a major player in this industry even through the recent decrease in oil prices. Via the acquisition, Royal Dutch Shell looks to increase its ability to provide gas as a global commodity. In addition, the company looks to increase its scale and profits in liquefied natural gas and deep water drilling. Though Royal Dutch Shell already stands in the number two spot globally after Exxon Mobil
in the oil and deep water drilling sectors, it looks to capitalize on emerging markets—Asia’s liquefied natural gas industry is expected to grow, along with major oil locations in Nigeria and the Gulf of Mexico. Acquiring BG Group will also allow Royal Dutch Shell
to establish a strong position in Brazil against Petrobras which is expected to become a key player in production.
Royal Dutch Shell predicts that with the acquisition, the new production presence in Brazil has the potential to generate a tenfold increase of output to 550,000 barrels of oil and gas per day. Despite the amount paid for BG Group, the low oil prices allow Royal Dutch Shell to acquire assets at a comparatively low cost. As a $70 billion deal, this is the first major energy industry merger that has occurred in over a decade which is close to closing the gap on US Exxon Mobil, the world’s current largest oil company. Headquartered in The Hague, Netherlands, Royal Dutch Shell currently stands as one of Big Oil’s six “supermajors,” having met over $421 billion in yearly revenue.
The company is also listed as one of the world’s most valuable companies as their revenue was equal to 84% of the Netherland’s GDP in 2013. Its operations spans over 90 countries and has over 40,000 service stations worldwide. Via our proprietary website Just NSN Parts
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Posted on April 15, 2015