Commission Clears Shell To Acquire FCE
Issued 17 November 2000/120
Commission Clears Shell To Acquire FCE Subject To Divestment Of Range Of Assets
The Commerce Commission today cleared Shell Overseas Holdings Limited to acquire Fletcher Challenge Energy Limited (FCE), subject to Shell divesting a range of assets currently owned by Shell and FCE.
Commission Chair John Belgrave said that the Commission was satisfied that, subject to the divestment undertakings, Shell would not acquire or strengthen dominance in any of the relevant markets. These are the markets for:
* current gas production * gas production after 2009, and * production of liquified petroleum gas (LPG).
Mr Belgrave said that these are the same markets that were relevant to Shell's earlier application, which was declined by the Commission because of dominance concerns.
Shell's first application included undertakings to divest certain assets. These plus further divestment undertakings were also included in the second application.
The Commission has given clearance subject to the divestment of assets including:
* all FCE's interests in the Kupe field * all FCE's interests in Kapuni Gas Contracts Limited * all FCE's interests in Challenge Petroleum Limited * all FCE's interests in New Zealand Refining Company Limited * all FCE's interests in the Tariki, Ahuroa, Waihapa and Ngaere fields (known as TAWN) * all FCE's interests in the Ngatoro field * all FCE's interests in the McKee field * 10 percent of the shares in the Maui field * 3.7 percent of the shares in the Pohokura field, which would reduce Shell's post-acquisition interest to below 50 percent * all FCE's interests in the Kaimiro field, and * all FCE's interests in the Mangahewa field.
Mr Belgrave said that these divestments provide a significant amount of gas that, together with other constraints, will provide effective competition to Shell in the current gas production market and the market after 2009.
The divestment of the TAWN fields is significant in the LPG production market as it provides an LPG producer independent of Shell that ,together with other independent producers of LPG, will constrain Shell effectively in this market.
Further details will be available when public copies of the Commission's full decision are released early next week. The decision will be available from the Commission's website, www.comcom.govt.nz, and in hard copy.