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Job losses loom as Shell completes BG takeover

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While the majority of the 2800 job losses are likely to be in the pair’s London head offices, Shell’s local Perth headquarters and BG’s Brisbane corporate offices are expected to take a substantial hit.

Matt Chambers: FEBRUARY 16, 2016

With the $90 billion takeover of BG Group finally complete, Royal Dutch Shell will restructure its Australian business, resulting in job losses, probably running into the hundreds, in Brisbane and Perth.

The oil major says no decisions have been made on numbers of job cuts that will be made locally, despite in December saying 2800 jobs would go worldwide as a result of the biggest oil takeover in more than a decade.

Shell Australia chairman Andrew Smith says there has been no change to the logic of the deal, which will see Shell take control of the $US20bn Queensland Curtis LNG project, the first of three big LNG projects to export from Gladstone.

“It’s a great day for us, the combination of Shell and BG further develops our position as a major supplier and producer of LNG and potentially with the growth that’s available in the Asian region,” Mr Smith told The Australian today.

“Given our capacity in the LNG business and our interest in the Arrow joint venture, I think this deal makes Shell Australia the largest foreign investor in Australia.”

The deal was finalised on Monday, London time.

Mr Smith said the first thing he would do as the new head of BG’s local assets — acquired in the takeover of Queensland Gas Co — was to gain an intimate understanding of the business.

“We see the QGC staff as a very professional group, and we’ll need their expertise to run this business,” he said.

“We’ll be looking at the benefits of business restructure — obviously that restructure will involve job reductions but we need to be clear we haven’t taken any decisions about jobs in any location yet.”

The restructure comes as Shell, like everyone else in the oil and gas business, hunkers down for a prolonged oil price downturn by cutting costs and spending plans.

While the majority of the 2800 job losses are likely to be in the pair’s London head offices, Shell’s local Perth headquarters and BG’s Brisbane corporate offices are expected to take a substantial hit.

Shell’s Perth office has about 600 people and BG’s Brisbane headquarters had 900 people remaining after cost-cutting last year.

As the takeover was clearing Australian competition and foreign investment regulators last year, Shell said one of the key advantages for local gas supply and investment would be the increased chance that the Arrow CSG fields in Queensland owned by Shell and PetroChina would be developed.

“We’ll be looking to understand the business in Queensland, the opportunities it presents, the opportunities between the joint ventures and QCLNG and Arrow,” Mr Smith said.

“Arrow and QCLNG have neighbouring tenures in the Surat basin and QGC has existing infrastructure in the Surat, so we see there’s industrial logic in both parties being able to access the existing infrastructure.”

He said it was too early to tell whether improved markets would be needed to underpin the Arrow development, or whether there were enough efficiencies for it to be logical in the current downturn, which has seen the oil-linked price of Asian LNG plummet.

SOURCE

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