Shell to cut spending further if BG merger gets green light

Royal Dutch Shell on Tuesday said it would cut capital spending in 2016 by $2bn (£1.35bn) to $33bn (£22.3bn) if it receives the go-ahead on its proposed takeover of BG Group.

Shell added that the final outcome for capital investment next year would depend on its assessment of BG's capital commitments.

The group expects the $53bn acquisition of BG to be completed by 15 February following shareholder approvals in late January.

Ben van Beurden, chief executive of Shell, said he believes the deal will create value for shareholders, particularly in deep water and liquefied natural gas.

"The combination with BG is a strong platform to refocus the company, to create a simpler and more competitive Shell," he said.

The CEO said Shell was "pulling multiple levers" to manage the downturn oil prices but believed the company had delivered in 2015 with a strong balance sheet, and $12bn of cost and capital spending reductions.

"We aim to reduce costs and capital spending once again in 2016, as we combine Shell with BG, and continue to take impactful decisions on portfolio and options," Holliday said. "This is to ensure that Shell can continue to finance the investment programme and the dividend, despite the downturn."