Helge Lund urges Shell to integrate BG employees based on merit

Helge Lund, chief executive of BG Group, has urged Royal Dutch Shell to adopt a "merit-based" selection process in integrating the thousands of employees whose jobs could be at risk following the Anglo-Dutch giant's £55bn takeover offer for its smaller UK energy rival.

Speaking to the Financial Times, Mr Lund - who will not stay on after the deal - said nobody could guarantee BG employees' roles in the combined group. But he has told Shell it is "a critical process to get right".

There are fears in BG's Reading headquarters that hundreds of roles could disappear after the deal's expected closure in early 2016. Some 1,200 of the company's 5,000 employees are based in the UK, including in Aberdeen, where Shell's own North Sea operation is based, and Reading.

Any job losses are likely to form part of the $2.5bn in projected annual cost savings Shell has said it wants to achieve from 2018.

"I have done two mergers before. To get the people processes right is absolutely essential and even more important in the context of BG," Mr Lund said. "A significant part of the value in BG is the culture, the way we operate, the entrepreneurial spirit, the drive, how close we are to our customers."

"One important aspect of this will be to get the integration right so it is a merit-based process into new positions."

Mr Lund, who joined BG from Statoil in February, has come under fire for a generous pay package that could see him earn up to £28m for his short tenure as chief executive.

He said he understood public reaction to his remuneration, adding: "I understand the interest on this topic. I also recognise and agree that shareholders and others have a right to express their views on the issue around how the company is run."

Asked whether he would turn down any performance-based share awards, Mr Lund said: "There will not be any clarity around this before the deal closes . . . At this point in time, I cannot speak more about this."

BG on Friday reported a 52 per cent drop in first quarter operating profit before interest and tax to $945m, from $1.97bn in the same period one year ago, beating analysts' expectations. A strong trading performance in its North American liquefied natural gas trading arm prevented a steeper slide.

Like other big oil and gas groups, BG has suffered from the fall in crude prices - its LNG supply contracts are linked to the price of oil. However, the recent recovery in crude has improved the outlook for LNG prices, in part leading the company to revise higher its guidance for LNG earnings in 2015, from $0.7bn-$1.1bn, to $1.3bn-$1.5bn. BG's shares rose 0.9 per cent to £11.85.

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