Shell to Cut Up to 9,000 Jobs--Update
By Sarah McFarlane
Royal Dutch Shell PLC said it would cut up to 9,000 jobs in a
broad restructuring, as the energy giant grapples with the
continuing fallout of the coronavirus pandemic.
News of the cuts came Wednesday as the company warned it would
report another set of poor earnings for the third quarter. Shell
flagged a weaker performance in its trading activities --
previously a bright spot in an otherwise tough second quarter --
and said its oil-and-gas production business would report a second
consecutive quarterly loss.
The update from Shell gives a first glimpse at how the world's
biggest oil companies have continued to struggle in the most recent
quarter. The pandemic has sapped demand for oil, sending prices
tumbling and hitting profits hard. That has already prompted Shell
to write down the value of some of its assets and cut its dividend
for the first time since World War II.
Shell said it was restructuring to focus more on the highest
value oil it produces, grow in liquefied-natural gas and invest in
low carbon energy businesses, while shrinking its refining
operations. It expects the plan to deliver annual cost savings of
$2 billion to $2.5 billion by the end of 2022, including from the
staff cuts, less travel and fewer contractors.
It expects to cut between 7,000 and 9,000 jobs from its more
than 80,000 employees.
The planned job cuts follow similar moves at peers including BP
PLC and Chevron Corp. to rein in costs amid the pandemic.
Shell said its restructuring isn't just a response to the
pandemic, but also part of a broader plan to accelerate investments
in low-carbon energy.
The company says that by 2050 it will sell predominantly
low-carbon electricity, biofuels, hydrogen and other solutions.
However, it says it needs its oil-and-gas business to perform well
to fund that change.
Chief Executive Ben Van Beurden said Shell's core business would
be critical to the effort. "We need it to be very successful, so we
have the financial strength to invest further in our lower-carbon
products," he added.
Shell is expected to update its strategy early next year,
including giving details on its future spending on low-carbon
BP earlier this year announced the most aggressive plan so far
by an oil major to shift away from oil and gas -- cutting its
production by 40% in the next decade -- while expanding in areas
including wind and solar energy.
Detailing its performance in the third quarter, Shell said its
LNG business would report lower margins, as long-term contracts
started to reflect lower oil prices. It also said refining activity
fell, although noted an improvement at its oil product marketing
business compared with the previous quarter.
Analysts said the update was in line with expectations and that
they hoped Shell would give more clarity about its restructuring
plans when it reports its third-quarter results on Oct. 29.
Write to Sarah McFarlane at email@example.com
(END) Dow Jones Newswires
September 30, 2020 05:30 ET (09:30 GMT)
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