Last week, Royal Dutch Shell PLC and BG Group PLC announced plans to cut staff and direct contractor positions across both companies and reduce spending by the end of the year as the companies look to streamline operations.
Ben van Beurden, CEO of Royal Dutch Shell, said his company expects to close on the $70 billion merger with BG Group in a few weeks. The deal will result in about 10,000 jobs cuts across the board.
The layoffs are a part of Shell’s plan to adjust to the new $33 billion combined budget (compared to 2014’s $47 billion combined budget). The company also plans to reduce capital investment by about 30 percent next year compared to last year’s combined figures.
In 2015, Shell’s operating costs were down 10 percent from the year before. This year the firm expects costs to fall another $3 billion, bringing the total costs to about $42 billion for 2016.
“I’m pleased with Shell’s operating performance in 2015 and the momentum in the company to reduce costs and to improve competitiveness,” Beurden said in a statement. “Bold, strategic moves shape our industry. 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.”
The merger with BG Group is slated to close in the coming weeks and will benefit shareholders, Van Beurden said, despite the reductions. Shell expects the deal to create pre-tax synergies of $3.5 billion.
Article written by HEI contributor Aliyah Cole.