Multinational oil and gas company, Royal Dutch Shell has said it will cut 2,800 jobs if its planned takeover of BG Group succeeds.
The proposed job cuts comes just four months after Shell announced the sacking of 7,500 workers in July, though the deal is set to be completed early next year.
Head of Equities at financial company, Standard Life Investments, David Cumming told the BBC that it was difficult to make the deal work with oil being below $ 40 (Sh4,000) a barrel, saying oil prices needed to be $60-70 (Sh6,100-Sh7,100) a barrel for the deal to work.
In April, Shell announced it had agreed to buy BG in a deal that valued the oil and gas exploration firm at about £47 billion (Sh7.2 trillion). However, its latest statement confirms that the planned job losses are part of its operational and administrative restructuring.
“Further detailed work will be undertaken on the details of the proposed restructuring as part of ongoing integration planning,” Shell said in a statement.
According to Shell chief executive Ben Van Beurden, the companies are seeking approval from both sets of shareholders as they move towards the deal completion in early 2016.
Last week, the price of oil fell to seven-year lows, with both Brent crude and US crude now below $40 a barrel.
Speaking before Shell announced the plans for job cuts, Cumming said given the low oil price, possible options were either for Shell to walk away from the deal, change the terms of the deal, or for shareholders to reject the deal.
“Shareholders could vote the deal down, and the break fee is pretty low, so I think Shell will come under pressure over the next few months to say how the deal is going to work,” added Cumming.
