Brazil gave the green light to oil major Royal Dutch Shell to buy smaller rival BG, advancing the $70 billion merger -- the largest of the past decade -- closer to completion in early 2016, Reuters said July 8.

Shell is set to become the largest foreign operator offshore Brazil after it buys BG, so the clearance from the country was a crucial step to complete the merger on time.

Brazil's competition authority CADE said on Wednesday it had given preliminary approval to the transaction "without restrictions." BG said that if no appeals were lodged or referrals made in the next 15 days, CADE's clearance would become final. A spokesman for Shell confirmed the approval and the 15-day appeals period.

BG had previously obtained a green light from United States Federal Trade Commission (FTC) and now only needs pre-conditional approvals from the European Union, Australia and China for the merger to go ahead.

"The filing process for each of these is under way, and the transaction is on track to complete in early 2016," it said.

Shell and BG produced a combined 212,252 barrels of oil equivalent per day in Brazil in May, or 7.1 percent of the country's total. Analysts expect this figure to double to nearly 500,000 boepd by 2020.

The two companies have stakes in Brazil's most exciting oil plays, with BG owning 25 percent of the massive Lula field and Shell owning 20 percent of the Libra prospect.

The deal comes as Brazil's state-run oil company Petroleo Brasileiro SA is battling with a massive corruption scandal, heavy debt load and lower oil prices. The company, which is the operating partner in BG and Shell's key offshore projects, is scrambling to sell assets to pay off debts and allow it to invest in ouput growth.

Brazil, itself on the verge of its deepest recession in a quarter century, is keen to ensure new production from giant offshore fields is not hindered by the scandal, which led to 23 implicated service companies having their payments frozen and being banned from bidding for new work.

Shell's purchase of BG, which followed the near halving of oil prices over the past year, was expected to spark a flurry of mergers and acquisitions in the energy industry, but so far few deals have been announced.