Royal Dutch Shell PLC plans to cut as many as 9,000 jobs as the COVID-19 pandemic accelerates a company-wide restructuring into low-carbon energy.
The move reflects the challenge facing Big Oil as the pandemic persists, with some in the industry believing the era of demand growth is already over. As the crisis hastens the shift to cleaner energy, oil majors are axing jobs, taking multibillion-dollar writedowns and even slashing once-sacrosanct dividends.
At Shell, job reductions of 7,000 to 9,000 are expected by the end of 2022, including about 1,500 people taking voluntary redundancy this year, the company said yesterday.
Photo: Reuters
It has about 83,000 employees. Sustainable annual cost savings of US$2 billion to US$2.5 billion are predicted by that time.
“We have to be a simpler, more streamlined, more competitive organization,” Shell chief executive officer 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,” he said.
Shell also warned of lower sales in the third quarter, saying that oil product volumes were about 4 million to 5 million barrels a day, down from 6.7 million a day a year earlier.
Oil product trading results would fall short of the historical average and would be “significantly lower” than in the second quarter, it said.
That shows that the oil-trading bonanza that saved Shell’s last set of results is unlikely to be repeated.
The company also expects refining margins to be much lower than in the second quarter.
Its full third-quarter financials, scheduled for Oct. 29, are to include impairment charges of US$1 billion to US$1.5 billion.
Shell’s reorganization is also designed to further its expanded green ambitions.
The firm in April said that it aimed to eliminate all net emissions from its own operations and the bulk of greenhouse gases from fuel it sells to its customers by 2050.
Shell also said that it would ultimately only do business with emission-free companies.
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