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SHELL BOSS: The oil slump won’t last

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Will Martin: 11 JAN 2016

The CEO of Shell has made a pretty bullish call on the price of oil just weeks before the company tries to complete its merger with BG Group in one of the biggest oil deals in history.

Speaking with the Sunday Times ahead of a vote by shareholders on the proposed $51 billion (£35 billion) deal, Ben van Beurden said that he couldn’t see today’s oil prices lasting and that he reckoned things would pick up in the coming years (emphasis ours):

“The oil prices we are seeing today are not sustainable and are going to settle at higher levels,” he said, “and higher, in my mind, over the next few decades than the low $60s that we require to make this deal a good deal.”

Shell really needs to see a big rise in the price of oil, however, for its acquisition of BG to make any financial sense. When the potential merger was first announced in April, oil cost about $50 (£34.41) a barrel, which, while still a big slump from the $105 (£72.25) highs of summer 2014, is still nearly 35% higher than prices right now.

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