Australia’s competition regulator approves Woodside-BHP merger

Australia's competition regulator said on Thursday it has no objection to Woodside Petroleum’s proposed US $28 billion acquisition of BHP Petroleum International Pty Ltd, clearing the way for the creation of a global top 10 independent oil and gas producer.

Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims said the merger would not reduce competition in the domestic gas market.

“We examined the proposed acquisition closely as it would combine two of the four largest domestic natural gas suppliers in Western Australia,” Sims said in a statement. The review focused on the supply of domestic natural gas in Western Australia given this is where Woodside and BHP Petroleum overlap in Australia.

“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 percent,” Sims said.

“In Western Australia, gas exporters are required to reserve the equivalent of 15 percent of their export production for the domestic market, ensuring that domestic gas will continue to be available from Woodside and BHP Petroleum’s export assets, and from a range of other competitors,” he added.

On November 22, BHP Group and Woodside signed a binding share sale agreement for the merger of BHP’s oil and gas portfolio with Woodside. Woodside will acquire the entire share capital of BHP Petroleum in exchange for new Woodside shares.

The merger creates a global top 10 independent energy company by production and the largest energy company listed on the ASX. The combined company will have a high margin oil portfolio, long life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition.