Press releases from different sources have finally brought some accomplishing news announced by both Royal Dutch Shell Plc. and BG Group Plc. in final completion of their merger worth US$ 50 billion. The deal is believed to open further opportunities for Oil giant over offshore Brazil – presently amid the most esteemed global oil plans yielding tougher challenges for foreign oil players.
[According to MarketWatch: The BG acquisition will aid Shell in boosting production by around 20% amid increasing its reserves 25%.]
Over a conference held in Brazil, Shell’s CEO, Ben van Beurden, spoke with high positivity for the union in better outcome provision of the prospects to its shareholders alongside becoming more of a robust contributor over global crude platform — where oil cost is rickety — in better predictability output for investors.
The deal is also expected to bring up significant position to Shell Plc. in rapidly spreading liquefied natural gas market, becoming greatest foreign oil companies in Brazil, one of the top three options for the oil giant, to explore and produce gigantic crude volume. Not to mention, Shell had already made numerous number of investments in Brazilian pacific.
“Brazil will be the most valuable country in our portfolio and will remain a key destination country for us to investment dollars for at least a decade.”- Mr. van Beurden
However, despite of acquiring world class oil fields Brazilian assets — assumed to be profitable even at relatively low crude prices — the recent investment might be hit by number of challenging headwinds for the oil giant. Analysts foresee a Brazilian oil sector fresh off a massive corruption scandal or a turbulent political scene to be in trouble the most.
Moreover, keeping in sight the impact of the continuing scandal on Petróleo Brasileiro SA, recent government proposals to substantially increase taxes on oil and gas production, and Petróleo Brasileiro SA’s massive debt load, Jefferies analyst Jason Gammel cites not fewer but a large number of risks after the union:
“Petrobras’ ability to finance itself is certainly a risk.” – Jason Gammel
Upon this, Ben van Beurden stated oil giant neither to be exposed in corruption scandal involving Petrobras, nor to be factored in any sort of potential slow pace in country’s oil industry due the scandal (before the BG acquisition).
