Shell set to slash 2,800 more oil jobs if BG mega-merger goes ahead

Shell Chief Executive  Ben van Beurden
Shell Chief Executive Ben van Beurden

Oil giant Shell expects to slash thousands more jobs to save costs if its takeover of BG Group goes through as planned early next year following a final green light from China.

Since the $47 billion mega-merger was announced in April 2015, crude oil prices have continued to slump – crashing last week below the psychologically important $40-barrel price.

The fall in Shell’s share price since April means the value of the deal has fallen to $53 billion from $70 billion.

Shortly after announcing the green light from China, Shell issued a statement saying it expected to cut about 2,800 roles globally from the combined group.

That would be nearly 3% of the group’s combined workforce of about 100,000 – or equivalent to more than half BG’s roughly 5,000 employees.

The proposed new job cuts are also in addition to previously announced plans to reduce Shell’s headcount and contractor positions by 7,500 worldwide

Now some institutional investors are now raising doubts on the economic logic of the deal.

David Cumming, head of equities at Edinburgh-based Standard Life Investments, told a local radio station: “The deal doesn’t make financial sense at the current oil price. You have got to be pretty bullish on the current oil price to make this deal work”.

In its latest statement, Shell said that the planned job losses were part of “operational and administrative restructuring”.

“Further detailed work will be undertaken on the details of the proposed restructuring as part of ongoing integration planning,” Shell said and Chief Executive Ben van Beurden added that shareholders would now be asked to endorse the merger.

See also North Sea faces ‘nightmare before Christmas’ warning from KPMG 

http://www.scottishenergynews.com/north-sea-faces-nightmare-before-christmas-warning-from-kpmg/

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