Oil Slump Makes Shell Scramble to Pay for BG

16.02.2016 -

As it finally completed the £36 billion ($53 billion) mega merger with BG Group on Feb. 15, multinational oil and petrochemicals group Shell was still struggling with the logistics of shedding $30 billion of assets in the next three years at prices expected before the oil market plunged.

The takeover of British rival BG has transformed the Anglo-Dutch group into the world’s top player in liquefied natural gas (LNG) but it will have to scramble to sell assets and shed several thousand jobs to finance the deal, buy back shares and support dividends payments.

Shell has said it will “backload” the sale of its assets towards the end of the three-year period when oil prices may have recovered somewhat, while adding that it will focus its disposals initially on “oil price insensitive” business areas such as refining, lubricants and chemicals.

With the BG buy announced in spring 2015, the group is banking on rapid growth in the global LNG market. With the added critical mass, it has already passed Chevron to become the world's second-largest public oil and gas company by market value behind ExxonMobil.

Under the combined group’s business structure, BG – headed by Huibert Vigeveno – will become a wholly-owned subsidiary of Shell. The Dutch native headed the integration planning team and will oversee its implementation.