Shell, the leading gas company, announced its plan to drop 2,800 jobs after merging with BG Group PLC next year.
The plan to cut jobs will result into trimming about three percent of the combined company's workforce, as the energy group struggles with a prolonged slump with regards to oil prices.
According to a report by The Wall Street Journal, the job cuts were announced on the same day that Shell and BG said that Chinese regulators had given "unconditional" approval for the merger, the final major antitrust hurdle the companies faced.
Shell has already announced approvals for the tie-up from regulators in Brazil, the European Union, United States and Australia.
Moreover, the planned 2,800 job cuts would be in addition to the eliminated 7,500 positions at Shell, which was announced earlier this year.
According to Shell CEO Ben van Beurden, "This is a strategic deal that will make Shell a more profitable and resilient company in a world where oil and gas prices could remain lower for some time."
Shell is also expected to trim the workforce, if the roughly $70 billion takeover of BG goes as planned next year; however, the scale of the cuts were not yet known.
It's interesting to note that BG, a British company, is considerably smaller than the company it's buying. The company has roughly 5,200 employees, compared to Shell's 90,000 according to its own website.
In a related report by The Guardian, some shareholders of the gas company have become increasingly doubtful about the BG deal, which was agreed on the assumption that oil prices would recover to at least $90 per barrel by 2020.
It should be noted that the price of oil has slumped from $115 a barrel in the summer of 2014 to less than $40 right now, with some analysts saying that it may fall further.
But Shell said it aimed to press on with the deal by seeking approval from both sets of shareholders, but Standard Life, one of the biggest investors in the UK stock market said that the deal could not work with oil prices so low right now.
Standard Life Investments Head David Cumming said, "The deal doesn't make financial sense at the current oil price. You have to be pretty bullish on the oil price to make this deal work."
Furthermore, BBC reported that Cummings also said that shareholders could vote the deal down. However, he declined to say how he's going to vote on the deal.
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