Shell takeover of BG sparks North Sea jobs fears

Royal Dutch Shell's takeover of smaller UK rival BG Group is fuelling anxieties about industry job losses in Aberdeen, centre of the North Sea oil sector, because both companies have substantial operations there.

But industry experts and Aberdeen business people said the takeover, which values BG's equity at £47bn, was unlikely to pose any major threat to employment or the area's wider economy.

The slumping oil price and a spate of redundancy announcements in recent months have raised questions about the northeast Scottish city's long oil-fired boom, with taxi drivers, restaurants and hoteliers already reporting dipping demand.

While outlining his rationale for acquiring BG on Wednesday, Ben van Beurden, Shell's chief executive, did not rule out further job cuts in the North Sea.

Shell's commitment to the North Sea was "unchanged", Mr van Beurden said, but he added that the combined group's operations in the area were "lower in the pecking order" compared with its ambitions to strengthen gas and oil positions elsewhere in the world. He also said that change was needed to make the declining British basin attractive for investment.

"We have to look at how we make the North Sea a healthy province again," he said.

The Unite union quickly called for "urgent assurances" over jobs, saying claims the takeover would allow $2.5bn in savings suggested pain for workers.

"North Sea oil and gas is in the grip of a concerted attempt by the offshore industry to impose a race to the bottom on jobs, terms and conditions," said Pat Rafferty, Unite Scotland secretary. "This mega-merger should not be built off the back of crude cost cutting and further job cuts."

Shell last month announced it would shed at least 250 UK jobs this year and switch to an "even time" offshore shift pattern that is fiercely resisted by trade unions.

Shell's job cuts, which included agency contractors based in Aberdeen and offshore, amounts to a reduction of more than 10 per cent in its 2,400-strong UK North Sea operations and followed 250 job losses announced last year.

The RMT union, which represents some North Sea onshore and offshore workers, said operators were already planning more cost reductions in response to the collapse in the price of crude.

The Shell-BG deal made little difference to an already difficult outlook for sector employees, said Jake Molloy, Aberdeen-based RMT representative. "It's been pretty much business as usual," he said.

Industry experts said there was broad consensus in the North Sea oil sector that costs had to be reined in to ensure its continued survival.

Bob Ruddiman, Aberdeen-based head of energy for law firm Pinsent Masons, said the merger meant "one less customer" for industry suppliers, but was unlikely to have much impact on employment.

Shell was likely to want to shed some of BG's North Sea assets, but there would be willing buyers, Mr Ruddiman said.

"We expect there's going to be a new wave of investors into the North Sea and I see this as an opportunity for others," he said.

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