£47bn Shell & BG oil merger ‘risks’ North Sea jobs

ROYAL Dutch Shell has paid out £47 billion for exploration firm BG group in a move that could put North Sea jobs at risk.

Royal Dutch Shell chief executive Ben van Beurden, left, shakes hands with the chairman of GB group Andrew Gould. Picture: AP

The companies unveiled ­details of the deal – the biggest in the industry for several years – in a statement to the London Stock Exchange.

The takeover by the Anglo-Dutch company comes as the oil industry looks to become more efficient and reduce costs in the face of falling energy prices.

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Both firms have interests in the North Sea, with Shell employing about 2,400 people in Scotland’s offshore industry. BG Group employs 1,500 workers in Aberdeen and at its headquarters in Reading.

Yesterday union leaders warned that jobs could be shed as a result of the mega-merger. The companies were unable to rule out job losses in the long run but claimed the deal prevented cuts being implemented by both firms in the short term.

Willie Wallace, a regional officer in Aberdeen for Unite, said: “When you get a merger of two sizeable companies, once the dust settles often the new company looks at what they can do differently. There’s always a worry that could lead to further losses down the line.”

Professor Alex Kemp, an oil economist at Aberdeen University, said the recent fall in the oil price, which earlier this year fell to below $50 a barrel, meant change was inevitable.

He added: “We expect rationalisation when there is a major change in the operating environment such as the one we have seen with the oil price ­collapse.”

Simon Henry, Shell’s chief financial officer, said yesterday he believed job losses from the combination globally would amount to “quite a few ­hundred”.

He said these were likely to be more in areas such as corporate administration, including marketing, and the supply chain than at the rigs.

“The further away from the drill bit you are the more opportunity [for de-duplication] there is,” he added.

Asked whether there would be North Sea job losses from the takeover, Shell chief executive Ben van Beurden mentioned redundancies his firm had already announced in what he said was a “very challenging” region.

He added that the company remained committed to the North Sea.

The chief executive was referring to Shell’s announcement last month that it was to cut 250 jobs in the North Sea.

BG Group, which employs about 5,200 staff in 24 countries, has key growth projects in Brazil and Australia. The natural gas producer was created in 1997 when British Gas demerged into two separately-listed companies, with Centrica having responsibility for the retail side.

BG yesterday confirmed its board had backed an offer from Shell valuing the business at 383p a share.

A Scottish Government spokesman said: “The announced buyout of BG Group by Royal Dutch Shell demonstrates that the oil and gas sector continues to offer attractive investment opportunities, and we are pleased to see Shell’s chief executive restate his commitment to North Sea oil, with planned investment of £4 billion between 2016 and 2018.

“It is encouraging that investors continue to have confidence in the sector, a global industry in which Scotland has clear competitive advantages.”