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Shell May Cut 2,800 Jobs After Buying Out BG Group

Shell is set to trim a further 2,800 jobs following its merger with BG Group, in an effort to persuade investors of the feasibility of the £40bn deal.

Shell May Cut 2,800 Jobs After Buying Out BG Group

According to the Anglo Dutch oil company, up to 3% of the company’s combined workforce would be let go after the takeover is finalized in early 2016. The move, the company says, will save up to £3.5bn in costs by 2018.

The takeover deal is now at its final stages, as the oil giant has met its final regulatory requirement and has gained approval from the Chinese Ministry of Commerce. Other regulators in Brazil, Australia, EU and US have also approved the takeover.

Earlier this year, Shell laid off up to 7,500 of its employees, bringing the workforce down to 94,000 compared to BG’s 5,200 employees, many of whom will be laid off too. BG, based in Reading, may also lose its headquarters when the deal is finalized as Shell looks to find a new headquarters where it would be practical.

Sceptical investors are concerned over the ability of the deal to create value for money amidst falling oil prices. Experts predict that oil oversupply will likely continue into next year.

Standard Life, one of the largest investors in BG and Shell has pointed out to the lack of financial sense in the deal given the historically low oil prices.

David Cumming, head of equities at Standard Life, said, ‘At $40 a barrel, it will be very difficult to get this deal to work. You would need oil prices of between $60 and $70.”

He added, ‘The break fee is quite low, so it is likely that Shell will be pressurized over the next couple of months to explain how the deal will work.”

Meanwhile, Ben van Beurden, who is at the forefront of the merger deal, said that the acquisition would, “increase Shell’s profitability and will make it a more resilient company at a time when oil and gas prices could remain low for a while.”

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