Shell ‘kitchen’ largest oil transaction in nearly 20 years – CNNExpansión.com

NEW YORK (Reuters) – Royal Dutch Shell is in advanced talks to buy BG Group, in the first mega oil merger since the early 2000s, for extend its global leadership in gas production and reduce the gap with the largest firm in the sector, with ExxonMobil.

BG Group, which has a value of 46,000 million, said Tuesday in a statement it was in advanced discussions regarding a possible offer from Shell, whose market capitalization amounted to 202,000 million . Exxon has a value of 360,000 million.

“There can be no certainty about whether finally will bid for BG” said BG itself in a statement, adding that Shell should announce if you have a firm intention to make an offer to May 5 or announce that it does not intend to do it.

The first reported the deal was the newspaper The Wall Street Journal, citing people familiar with the matter.

Oil prices have fallen by half since mid-2014 due to the rise of oil shale in the US and Saudi Arabia’s decision not to cut production, creating a similar atmosphere early the 2000s, when there were several mega mergers.

At that time, BP bought Amoco and Arco, Exxon Mobil and Chevron acquired Texaco merged.

BG, which has ambitious growth targets and production projects billions of dollars in Brazil, East Africa, Australia, Kazakhstan and Egypt, has been seen for a long time as a takeover target rare even by its most powerful rival Shell or Exxon.

However, the British company suffered several problems that could complicate a transaction, bankers familiar with the operations of BG said.

“Brazil is certainly a drag in any transaction,” said a banker in London, referring to current research in the largest economy in Latin America on corruption charges involving state oil company Petrobras.

Including net debt BG, about 12,000 million dollars, any transaction would become the biggest this year and the largest globally in the field of oil and gas since 1996 quarter.

Shell declined to comment.

BG has also had many problems in Egypt and decreased by 6,000 million dollars worth of its oil and gas business in the fourth quarter.