9,000 Jobs To Be Culled By Shell As Part Of Its Low-Carbon Transition

Royal Dutch Shell has already embarked on a strategy to shift its core business from oil and gas to low-carbon energy and as a part of that plan the company will be culling jobs of about 9,000 people – which is about 10 per cent of the company’s workforce, the company announced. 

These layoffs will help the company to generate an additional annual cost saving of between $2 billion and $2.5 billion by 2022 which will be slightly more than the targeted cost savings of the company announced previously this year of between $3 billion and $4 billion, the company said. It had about 83,000 employees at the end of 2019.

Royal Dutch Shell has already embarked on a strategy to shift its core business from oil and gas to low-carbon energy and as a part of that plan the company will be culling jobs of about 9,000 people – which is about 10 per cent of the company’s workforce, the company announced. 

With the aim of cutting costs, a broad review of its business was launched by the company last month as a part of its strategy to shift to low-carbon energy.

The company expects to be able to trim down its workforce by 7,000 to 9,000 employees by the end of 2022, which will include about 1,500 people who will be taking voluntary redundancy this year, said the Anglo-Dutch company.

Job cutting of about 10,000 employees was announced by Shell’s rival BP this year which is a part of the company’s CEO Bernard Looney’s plans to rapidly expand its renewables business and bring down the importance of its oil and gas production business.

In the context of the plans of Shell to shift into the power sector and renewable which typically have low profit margins, cost reduction is critical for Shell.

With economies around the world go green, and with utilities and rival oil firms including BP and Total all trying to get a share of the market segment, it is also likely that the secgment will see high competition in the near future. 

“We have looked closely at how we are organised and we feel that, in many places, we have too many layers in the company,” CEO Ben van Beurden said in an internal interview published on Shell’s website.

In the third quarter, its oil and gas production of the company was set to drop sharply to around 3.04 million barrels of oil equivalent per day because of lower output induced by the impact of the novel coronavirus pandemic and the hurricanes that forced the company to shut down its offshore platforms, said Shell in an operations update.

In the third quarter, a recovery in fuel sales compared to the lows hit in the previous quarter was reported by Shell, the largest fuel retailer of the world, because of opening up of economies of some countries form the strict lockdowns induced by the pandemic. 

Its first quarterly loss in recent history was narrowly avoided by Shell in the second quarter because of strong performance in its trading business. The company however took an impairment damage of narrowly avoided nearly $16.8 billion after it sharply lowering its outlook for oil and gas prices because of the pandemic.

Another impairment of between $1 and $1.5 billion will be taken by the company in the third quarter, Shell said.

Royal Dutch Shell has already embarked on a strategy to shift its core business from oil and gas to low-carbon energy and as a part of that plan the company will be culling jobs of about 9,000 people – which is about 10 per cent of the company’s workforce, the company announced. 

(Adapted from EconomicTimes.com)

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