Shell plans to cut 10,000 jobs to reduce costs
Royal Dutch Shell is planning to cut 10,000 jobs upon completion of acquisition of BG Group in order to further reduce costs amid plunging oil prices.
The Anglo-Dutch energy company expects the $70bn deal to acquire BG Group to be completed in a matter of weeks.
The deal, however, would lead to the reduction of a total of 10,000 workers across both companies in 2015-16 as Shell continues to streamline and integrate the two companies.
Shell CEO Ben van Beurden said: "The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell, to rejuvenate the company, and improve shareholder returns."
"Shell's drive to improve competitive performance is delivering at the bottom line. Operating costs have reduced by $4bn, or around 10% in 2015, and the company expects Shell's costs to fall again in 2016, by a further $3bn.
"Synergies from the BG combination will be in addition to that. Together, these actions will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies, as streamlining and integration of the two companies continue."
In 2016, capital investment for combined Shell and BG is expected to be $33bn, the company said.
The company also added that following the acquisition of BG, the company targeting to complete $30bn worth of assets in 2016-18 while it has already completed asset sale of $20bn for 2014 and 2015, compared to the original target of $15bn.
"In addition to divestments, Shell has taken impactful decisions in 2015 to reduce longer term, low return upstream positions, such as the exit from Alaska exploration for the foreseeable future, cancellation of Carmon Creek heavy oil project, and exit from shales positions in multiple countries," Beurden added.
Shell shareholders are expected to vote on the proposed deal on 27 January 2016 followed by BG shareholders' vote the next day.
Image: Shell CEO Ben van Beurden. Photo: courtesy of Shell.