In 2016 it faces even more challenges, as Brent crude dropped just below $30 per barrel this week and Iran is ramping up its own oil production, adding to the global oil glut, now that it is free from Western sanctions that have crippled its energy industry. Nevertheless, Shell CEO Ben van Beurden remains optimistic, particularly because he sees a merger with BG, a leader in liquefied natural gas (LNG), as a move that will set his company apart from others struggling in a difficult market. “I’m pleased with Shell’s operating performance in 2015, and the momentum in the company to reduce costs and to improve competitiveness,” he said in a statement. Related: Will OPEC Be Forced To Call An Emergency Meeting Soon? “Bold, strategic moves shape our industry,” van Beurden said. “The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell to rejuvenate the company and improve shareholder returns.” When Shell announced its proposed purchase of BG in April, at a cost of $69.6 billion, it said the merger would create the world’s largest LNG company and eliminate redundant expenses for both companies. This was widely seen as an example of Shell’s ability to cope with market challenges. At the time, the deal was seen as a harbinger of additional mergers in which strong companies remained strong in the face of low energy prices by buying up smaller competitors. But such mergers haven’t materialized and Shell’s move doesn’t look so canny anymore because the value of its offer to buy BG has fallen from $69.6 billion in April to about $53 billion by the end of 2015. Related: Volatility In Oil Markets Hits A 7 Year High Shell shareholders will vote on the proposed merger with BG on Jan. 27, and BG’s shareholders will decide the next day. The outcome is anyone’s guess, but one analyst, Richard Griffith of the investment bank Canaccord Genuity Ltd., says he believes a merger makes sense. “The surprise is the how strong the integrated gas business has been,” Griffith told Bloomberg. “That’s a point Shell wants to make because the BG deal is the combination of two powerful gas companies.” In fact, two of Shell’s largest shareholders, Aberdeen Asset Management Plc and Invesco Asset Management Ltd., support the merger. Invesco fund manager Martin Walker said he believed a combined Shell-BG would lead to strong growth in gas production in the coming years. Only one Shell shareholder has publicly voiced its opposition to a merger. That is Standard Life Investments, which says the deal, if approved, would be “value destructive.” By Andy Tully of Oilprice.com More Top Reads From Oilprice.com:
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