LONDON • Royal Dutch Shell yesterday said it planned to cut 2,800 jobs following its mega takeover of smaller rival BG Group.
"Shell expects an overall potential reduction of approximately 2,800 roles globally across the combined group, or approximately 3 per cent of the total combined group workforce," the energy giant said in a statement.
The company said the cuts were in addition to previously announced plans to reduce its own headcount and contractor positions by 7,500 worldwide.
BG had 5,143 employees and Shell 94,000 at the end of 2014, according to data compiled by Bloomberg.
The Anglo-Dutch group earlier yesterday got clearance from the anti-trust authorities in China for its £55 billion (S$117 billion) takeover of BG Group, removing the final regulatory hurdle for its biggest-ever deal.
The clearance from China's Ministry of Commerce follows similar approvals from the authorities in Australia, Brazil and the European Union. BG and Shell will now seek assent from their shareholders, and plan to complete the transaction early next year.
The deal is aimed at helping Shell boost its flagging output thanks to BG's strong position in liquefied natural gas (LNG), a cleaner alternative to coal and nuclear energy.
The share and cash acquisition will make Shell the world's biggest LNG company and give it access to oil and gas fields from Brazil to Kazakhstan.
The outlook for the acquisition got a boost in October after BG raised its oil and gas production forecast for this year at a time when Shell's output has been stagnating.
The integration of the two companies could encounter some difficulties as BG's small and relatively nimble operations are merged with Shell's much larger structure.
However, analysts including Mr Iain Reid of Macquarie Securities Group and Mr Brendan Warn of Bank of Montreal still expect the deal to go through.
"It's a tough market for all energy companies right now, but Shell is very likely to proceed with the deal because they believe in higher long-term oil prices," Mr Reid said by phone from London.
"'The deal makes sense for Shell and is seen as a good thing."
The tie-up comes also as oil prices slump on world markets, severely reducing profits at energy majors.
The price of oil has dropped to its lowest in almost seven years as the Organisation of Petroleum Exporting Countries refuses to curb output to tackle a supply glut.
"I am delighted we now have all the pre-conditional approvals needed to move to the next important phase," said Shell chief executive Ben van Beurden.
"This is a strategic deal that will make Shell a more profitable and resilient company in a world where oil and gas prices could remain lower for some time."
Shell's B shares dropped 1.1 per cent in London trading yesterday, while BG advanced as much as 3 per cent and was 1.8 per cent higher at 942.10 pence in early trade.
BLOOMBERG, AGENCE FRANCE-PRESSE