Australia's competition watchdog has cleared oil and gas giant Royal Dutch Shell's proposed $70 billion takeover of rival BG Group, saying it will not substantially alter the domestic natural gas market.
The Australian Competition and Consumer Commission (ACCC) had earlier delayed a decision on the deal, amid concern that Shell may prioritise supply to BG's LNG facilities in Queensland over competing gas users, leading to higher domestic gas prices.
"The proposed acquisition would be unlikely to substantially lessen competition in the wholesale natural gas market, in either Queensland or eastern Australia more broadly," ACCC chairman Rod Sims said in a statement on Thursday.
Shell owns a 50 per cent interest in coal seam gas company Arrow Energy, which produces gas in the eastern Australia's Surat and Bowen basins.
BG holds a majority stake in the giant Queensland Curtis Liquefied Natural Gas project (QCLNG).
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The regulator said it had received a large number of submissions from market participants concerned about the competition effects of the proposed deal. Some had urged it to approve the acquisition, but only after undertakings from the two companies to make gas available domestically.
"The ACCC concluded that as Arrow is not currently focused on supplying domestic customers, and appears unlikely to be so in the future, aligning Arrow with an LNG operator would not change competition for domestic customers," Mr Sims said.
There was too much uncertainty about the amount and timing of future gas supplies for the regulator to consider that Arrow and BG would remain meaningful competitors in the domestic market, if the takeover did not take place, he added.
The regulator has been holding a year-long inquiry into east coast gas markets after complaints from gas users about an opaque trading market and lack of competition.
In preliminary observations in September, it said the arrival of large export-focused LNG projects appeared to have permanently affected pricing for local users.
Shell's takeover of BG, the biggest deal in the global energy sector in a decade, was first announced in April, after crude oil prices nearly halved to below $US50 a barrel, amid rising supplies and lacklustre demand.
The merger has already received the green light from regulators in the US, European Union and Brazil. It is now awaiting approval from Australia's Foreign Investment Review Board (FIRB) and the Chinese government.
On Thursday, BG Group confirmed the unconditional approval from the ACCC.
