Shell doubles the cost savings from £43bn takeover of BG Group

The deal with the former exploration arm of British Gas will make Shell a leader in liquefied natural gas and offshore oil production in Brazil, chief executive claims

Shell’s chief executive Ben van Beurden says he is “determined” his company will be in the vanguard of driving change through the oil industry as it battles to cope with the prolonged decline in prices.

He said that Shell’s £43bn takeover of BG Group remains central to its plans, adding that he had found a way to double the cost savings from the tie-up to $2bn (£1.3bn).

Shares in Shell leapt by 50p, or 3 per cent, to 1,764p as investors welcomed news of the extra savings.

The deal with the former exploration arm of British Gas will make Shell a leader in liquefied natural gas and offshore oil production in Brazil, Mr van Beurden claimed.

“Low oil prices are driving significant changes in our industry. I am determined that Shell will be at the forefront of that, and emerge as a more focused and more competitive company as a result,” he said.

“BG rejuvenates Shell’s upstream [production] by adding deep water and integrated gas positions that offer attractive returns and cashflow, with growth potential.

“We are reshaping the company and this will accelerate once this transaction is complete… Shell is becoming a company that is more focused on its core strengths.”

Last week, Shell plunged into the red after taking an $8.2bn hit from project cancellations in Alaska and Canada and a hefty writedown on its North American shale business. BP and BG also reported last week that they had been hit hard in the third quarter by the drop in oil prices.

Crude oil traded at an average of $51.30 a barrel during the quarter – just half the level of a year earlier; last summer the oil price was trading at $115 a barrel.

“Asset sales and hard choices on capital spending – such as the recent announcements to cease exploration in Alaska and the development of Carmen Creek heavy oil in Canada – underline the changes that are under way,” said Mr van Beurden. “Integration planning for Shell and BG is progressing according to plan.”

Shell was accused of making false claims about the extent of its clean-up operations in Nigeria in a report into oil spills in 2008 and 2009.

The company denies this.