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Shell Makes Cuts to Boost Returns

Allen Good7 December, 2016

With the BG acquisition in the books, Shell (RDSB) is embarking on the necessary steps to compete in a world of $60 a barrel oil.

Like the rest of the integrated group, Shell is working to reduce its cost base, which has become bloated during the past five years, by reducing headcount and improving its supply chain.

The integration of BG is integral to Shell’s efforts, as it holds the potential for $4.5 billion of cost-reduction synergies. Furthermore, the addition of BG’s low-cost production reduces Shell’s per-barrel operating cost, which ranked among the highest in its peer group. In total, Shell aims to reduce operating cost by 20% from 2014 levels by the end of 2016, with further reductions possible in later years.

At the same time, Shell plans to dramatically reduce investment levels…

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