Analysts say the acquisition is the most significant response yet to the
slump in oil prices and could set in motion a series of mergers as the
largest energy companies look to cut costs and restore profits.
By The Citizen Reporter &Agencies
In Summary
Dar es Salaam. Tanzania’s dream of being the
first country in East and Central Africa to have a liquefied natural gas
(LNG) plant may take longer than expected following yesterday’s move by
one of the key partners in the planned project to be acquired by a
Dutch firm.
The Royal Dutch Shell yesterday announced a mega
takeover of British rival BG Group worth £47 billion (Sh13 trillion), as
the pair consolidate in a sector battered by sliding oil prices.
“The boards of Shell and BG are pleased to
announce that they have reached agreement on the terms of a recommended
cash and share offer to be made by Shell for the entire issued and to be
issued share capital of BG,” said a statement released by the
Anglo-Dutch group.
The offer represents a premium of about 50 per
cent compared with BG’s closing share price on Tuesday, costing Shell
“approximately £47.0 billion” for its rival, the statement added.
“The result will be a more competitive, stronger
company for both sets of shareholders in today’s volatile oil price
world,” Shell chairman Jorma Ollila said in the statement.
Analysts say the acquisition is the most
significant response yet to the slump in oil prices and could set in
motion a series of mergers as the largest energy companies look to cut
costs and restore profits.
BG chief executive Helge Lund said the deal “delivers attractive returns to shareholders and has strong strategic logic.”
He added: “BG’s deep water positions and strengths
in exploration... will combine well with Shell’s scale, development
expertise and financial strength.”
BG entered Tanzania in 2010 through farm-in by
entering into a partnership with Ophir and is the operator of offshore
Blocks 1, 3 and 4 in which it has a 60 per cent interest.
The company has successfully drilled 14 wells to
date and already discovered an estimated gross resource of 15 trillion
cubic feet (TCF).
BG, Statoil and their block partners signed a
memorandum of understanding with the government of Tanzania last year
(April 2014) for the development of the LNG Plant – a project estimated
to cost up to $30 billion – to be developed in partnership with Norway’s
Statoil and Exxon Mobil of the United States.
The MoU covers the site selected for the LNG
plant, the process for acquiring the site, the lease to be negotiated,
and how any resettlement will be managed, according to information on
the firm’s website
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