London, UK (BBN)-Shell’s deal to buy oil and gas firm BG Group does not make “financial sense” at current oil price levels, an institutional investor has said.

David Cumming, head of equities at Standard Life Investments, told the BBC it was “very difficult to make the deal work” with oil below $40 a barrel.

He said oil prices needed to be $60-$70 a barrel for the tie-up to work.

The final regulatory barrier to the tie-up was cleared on Monday after it was approved by China.

It has already been approved by regulators in Australia, Brazil and the European Union.

Standard Life is among the top 20 investors in both companies.

Shell chief executive Ben van Beurden said the companies would now “seek approval from both sets of shareholders as we move towards deal completion in early 2016”.

‘Under pressure’

Shell announced in April that it had agreed to buy BG, in a deal which valued the oil and gas exploration firm at about £47bn.

Last week, the price of oil fell to seven-year lows, with both Brent crude and US crude now below $40 a barrel.

Cumming told the BBC’s Today programme that given the low oil price, possible options included Shell walking away from the deal, Shell changing the terms of the deal, or shareholders rejecting the deal.

“Shareholders could vote the deal down, and the break fee is pretty low, so I think Shell will come under pressure over the next few months to say how the deal is going to work,” Cumming added.

Cumming declined to say how he would vote on the deal.