The finance boss of Anglo Dutch Shell has warned the price of oil could fall to $20 a barrel within weeks, a forecast that would put exporters such as Nigeria in deeper financial jeopardy.
Simon Henry said Goldman Sachs’ prediction that Brent crude oil could fall to $20 a barrel ‘may actually happen in the next few weeks’.
Despite the distressing forecast, Shell is however asking shareholders to endorse a £36billion takeover of BG Group as a long-term deal that will be rewarding over a 15-year period.
Oil fluctuated around $37 a barrel on Monday after traders acknowledged the panic in the Chinese stock markets and the growing dispute between Saudi Arabia and Iran, the biggest rivals in the Opec oil cartel.
Shell is meeting with shareholders to outline the merits of the deal ahead of the shareholder meeting at the end of the month.
The BG deal’s break-even price is just over $60 a barrel and Henry added: ‘Not even Goldman Sachs is projecting anything below $60 for the 15 years that we are talking about.
Henry said many shareholders have been supportive and although some, such as Capital, had sold out it did not mean they were against the deal.
He also defended its ability to merge the oil giant with the gas group and said: ‘There was talk that we are slow and bureaucratic but we do learn and we have something of a track record to deliver on the deals we do.’