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BG deal will help savings, says Shell

Global oil company Royal Dutch Shell, known for its Shell Tonna S3 M 68 slideway oil among other products, has defended its BG tie-up, saying that it will result in bigger savings than previously announced.

The company said that its acquisition of the BG Group PLC, which represents its biggest deal to date, would start to be profitable with oil prices in the mid-$60s.

The company also predicts that its tie-up with BG Group PLC will reduce operating costs by around $2bn, while also cutting its exploration spend by $1.5bn in 2018.

The Anglo-Dutch oil giant also revealed that it would create two brand new standalone organisations consisting of a natural gas business and a shale and oil sands business, both commencing on January 1, 2016.

Shell’s deal with BG has raised eyebrows in many corners since it was announced in April, with some investors worried that the $70bn price tag was too high for BG and that the success of the deal hinged on a recovery in oil prices.

However, Shell’s Chief Executive Ben van Beurden has continued to defend the deal, saying:

“We are laying a platform for a fundamentally better company for the future in any oil price environment.”

Van Beurden has also commented in the past that it would take “something cataclysmic” to throw the acquisition off course.

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