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Agreement between Shell and BG Group - is the beginning of large acquisitions DW

April 10, 2015


In the oil and gas sector against the backdrop of lower oil prices occurred most in the past decade purchase concern Royal Dutch Shell British BG Group. As the expert on commodity market Eugen Weinberg told to german edition DW, it could give impetus to a number of similar mergers.
It is assumed that about 65 billion euros will be paid British-Dutch oil and gas concern Royal Dutch Shell for the British BG Group, which specializes in the production of natural gas. Given that the price of oil in the course of the last year almost collapsed almost twice caused the financial crisis in the entire field of oil and gas, the decision many experts considered premature. However, Weinberg, who heads the analytical department on commodity Commerzbank in Frankfurt does not think so.
"On the surface, of course, these things contradict each other. But during the second examination it becomes clear that due to poor initial conditions are very logical just yet. For me such agreements - a signal that many businesses comes the moment of truth. On the other hand, want to use some concerns low prices and expect a significant increase in quotations in the long run. Enterprises are investing their cash resources accumulated in recent years in order to get out of the crisis strengthened, "- said Weinberg edition DW.
According to Weinberg, the current situation in the region once again convincingly justifies old truth: "the more, the better." Those companies that spent money wisely and managed to save more than others, creating a greater volume of financial reserves are much more confident other volatility during the period of low prices.
"I remember how in the late 1990s was a phase of major mergers and acquisitions in the energy sector. BP has bought North American concern Amoco. Then went absorption concern Total company Elf Aquitaine. In those years there was a significant oversupply of oil. A barrel was worth some 10 dollars. In the area dominated by uncertainty and fear "- said Weinberg.
Now the situation in the oil market is very similar to that which was before. First, obviously overproduction of raw materials in a general economic downturn. Second comes the final stage of the settlement of the nuclear problem of Iran. In practice it unleashes Iran and the world oil market can happen throw additional volumes of Iranian "black gold", which would inevitably result prices down. But in the long run, says Weinberg, the potential for rising prices is quite large. This is what gives sufficient reason to invest in this sector. It is possible that in the near future there will be similar merger.
However, Shell and BG are one of the largest suppliers of liquefied gas. According to Weinberg, now gradually move away from the principle according to which the price of gas vyrahovuvalasya based on oil prices, which further lead to a single gas market. "Gradually release of gas from oil quotations. On the one hand, there is still no single gas market, but on the other hand, I think that in the future he will. So I see that companies engaged in LPG, great potential . For these companies gas component - a nice addition to the general range of industries in which they are employed, and with an eye to the future has already begun the battle for market share. "- says Weinberg.
Information from DW
April 10, 2015