Royal Dutch Shell (RDSa.L) has acquired Morgan Stanley’s (MS.N) European gas and power trading book as the U.S. bank continues its exit from the sector.
Shell is set to significantly increase its footprint in the gas market in the coming years if it completes its proposed $70 billion acquisition of smaller British rival BG Group (BG.L) and as part of a growing strategic alliance with Russia’s Gazprom, the world’s top gas producer.
Shell Energy Europe, its supply and trading arm in the region, has signed a binding sales and purchase agreement for Morgan Stanley’s portfolio, the Anglo-Dutch company said on Friday, without providing further details.
The deal includes only Morgan’s trading book and no staff, according to several sources.
“Comprising predominantly physical and financial gas and power trades, the deal further expands Shell’s activities in core energy markets across Europe,” Shell said in a statement.
Morgan Stanley, once one of the most powerful Wall Street banks in commodities trading, has drastically reduced its exposure in the sector due to regulations limiting banks’ proprietary trading in markets such as oil or metals.
The bank has sold its oil trading business to Castleton after its deal with Russia’s Rosneft (ROSN.MM) collapsed due to Western sanctions on Russia. Morgan’s liquefied natural gas (LNG) team left for Glencore (GLEN.L).
Shell’s shares were up 1.4 percent at 0940 GMT (5:40 a.m. EDT), in line with the European oil and gas index .SXEP.
By Ron Busso (Additional reporting by Dmitry Zhdannikov; editing by David Clarke and William Hardy)