ANKARA
Energy giant Royal Dutch Shell announced Wednesday that it has agreed to buy British multinational oil and gas exploration company BG Group for £47 billion ($70 billion).
With the acquisition, Shell expects its oil and gas production to rise by 20 percent, while reserves are projected to increase by 25 percent, the company stated in a statement on its website.
Analysts said the deal could herald a wave of consolidation in the sector as companies seek to gain scale and diversification.
Shell also has gas reserves in Australia, in a joint project with Petrochina, which the company has not been able to export because a terminal project has been cancelled. The deal with BG may permit shell to mobilize these reserves.
The company added that, the deal will enable it to focus heavily on growing its deepwater oil production in Brazil and empower its position in liquified natural gas, LNG, market
In addition, the deal is expected to enable Shell to compete with other energy oil and gas giants like the UK's British Petroleum, Russia's Gazprom and Rosneft, The U.S.' ExxonMobil and Chevron, and PetroChina.
Shell's market value is estimated around $190 billion, while the company reported its 2014 earnings as $19 billion.
Despite increased earnings in 2014, the company announced on Jan. 29 that it will cut back capital spending of over $15 billion dollars for the period between 2015 and 2017, while it told last October that its 2015 capex would be $35 billion - the same as 2014.
Meanwhile, BG Group announed on Feb. 3 that its 2014 full year profits fell by 14 percent to nearly $6.5 billion compared to 2013 amid the oil price slump, while it also reduced its capital investment budget for 2015 to $6-$7 billion, compared to its total $9.4 billion expenditure on exploration and production in 2014.
