Aussie competition watchdog clears Woodside, BHP deal
The Australian Competition and Consumer Commission (ACCC) on December 16 said it will not oppose Woodside’s proposed acquisition of BHP's oil and gas business.
“We examined the proposed acquisition closely as it would combine two of the four largest domestic natural gas suppliers in Western Australia,” ACCC chair Rod Sims said.
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“We found that post acquisition, Woodside would continue to face competition from a range of suppliers of domestic gas, including major producers Chevron and Santos, and from several other smaller suppliers including Shell and ExxonMobil. Woodside’s share of domestic gas after the acquisition will be approximately 20%,” Sims added.
The ACCC’s review focused on the supply of domestic natural gas in Western Australia given this is where Woodside and BHP Petroleum overlap in Australia. Woodside’s and BHP Petroleum’s customers for LNG, LPG, condensate and oil are either offshore or in areas where Woodside and BHP Petroleum do not overlap, ACCC said.
The ACCC also considered that Woodside would be unlikely to have an incentive to reduce the supply of natural gas from BHP Petroleum’s majority-owned, domestic-only site at Macedon, given gas from Macedon can only be supplied to the Western Australian domestic market.
In addition, the number of competing suppliers in that market is also likely to constrain Woodside from decreasing gas supply, the regulator said. The ACCC consulted the relevant Western Australia government department, the department of jobs, tourism, science and innovation, which did not express concerns about the proposed acquisition.
The combined entity will be among the top 10 independent energy companies with production of 200mn barrels of oil equivalent for this full year, and 2P reserves of 2bn boe, 59% of which is gas. The tie-up is expected to create $400mn/yr in synergies through corporate processes and systems, combining capabilities and improving capital efficiency. The merger was announced in August this year and a binding agreement was signed in November.
The merged entity will be owned 52% by existing Woodside shareholders and 48% by existing BHP shareholders. Completion of the merger is targeted for the second quarter of 2022.