Royal Dutch Shell says it plans to cut 2,800 jobs after it completes the takeover of the BG Group.
The news comes on the same day that China gave the deal the final go-ahead.
NPR’s Jeff Brady reports for our Newscast unit:
“The cut of 2,800 positions accounts for about 3 percent of Shell and BG’s combined global workforce.
“BG Group is a British company focused on natural gas. Shell announced last spring it would take over the rival in a deal valued then at more than $70 billion. Oil and gas prices are relatively low now so companies are looking for ways to cut costs. Before this, Shell said it would trim7,500 staff and contractor jobs.
“Shell says it expects to realize savings of about 3.5 billion dollars when the companies are combined.”
Bloomberg has a bit more background on the deal:
“The share and cash acquisition will make Shell the world’s biggest liquefied natural gas 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.
“Oil has dropped to the lowest in almost seven years as the Organization of Petroleum Exporting Countries refuses to curb output to tackle a supply glut. The slump has driven down shares of oil companies around the world, including Shell, which has lost 34 percent this year. The downturn has forced some to question if Shell is paying too much.”
Bloomberg notes that the deal was originally valued at $70 billion, but as oil prices have plummeted and the price of Shell stocks followed suit, the deal has “shrunk to about $53 billion.”