Royal Dutch Shell Plc will cut as many as 9,000 jobs as crude’s crash forces billions of dollars in cost savings and the oil and gas giant overhauls its business to embrace clean energy.
The move reflects the challenge facing Big Oil as the virus pandemic persists, with some in the industry believing the era of demand growth is already over. As the crisis hastens the shift to low-carbon energy, oil majors are axing jobs, taking multibillion-dollar writedowns and slashing once-sacrosanct dividends.
At Shell, 7,000 to 9,000 job losses are expected by the end of 2022 — as much as 11% of the workforce. The total includes around 1,500 people taking voluntary redundancy this year, the company said Wednesday. It predicts sustainable annual cost savings of $2 billion to $2.5 billion by that time.
“We have to be a simpler, more streamlined, more competitive organization,” CEO Ben van Beurden said in a statement. “In many places, we have too many layers in the company: too many levels between me, as the CEO, and the operators and technicians at our locations.”
Shell plans to “refocus” its refining business, eventually reducing its number of plants to fewer than 10, from the 15 it’s involved in today. Refining margins have been much lower this quarter than last quarter, and oil-product sales have shrunk to around 4 million to 5 million barrels a day from 6.7 million a year earlier, according to the statement.
Third-quarter oil-product trading results will fall short of the historical average and will be “significantly lower” than in the second quarter, the company said. That shows the trading bonanza that saved Shell’s last set of results won’t be repeated. Its full third-quarter financials, scheduled for Oct. 29, will include impairment charges of $1 billion to $1.5 billion.
Source: Bloomberg
