Shell Aims to Shed 10,000 Jobs

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) has announced plans to shed 10,000 jobs as oil prices continue to plummet.

The announcement arrives just weeks before the company's $70 billion acquisition of BG Group Plc (LSE: BG) (Reading, England) is expected to be finalised. For additional information, see April 9, 2015, article - Shell's Acquisition of BG Group Could Impact Big-Ticket Projects.

The job cuts form part of the streamlining of both companies, Shell stated, as it released adjusted figures for the 2015 financial year. Earnings for the year are expected to drop by up to 50% from 2014's $22 billion to between $10.4 billion and $10.7 billion for 2015. The figure does not take into account restructuring costs or other impairments.

Weaker than expected fourth- quarter profits are expected from the company's chemical, refining and retail business units. The company, like others in the oil and gas sector, is being heavily impacted by the collapse in the price of crude oil, which last week prices dipped under $27 per barrel--a 12-year low. Last week Industrial Info reported that fellow oil and gas company BP plc (NYSE:BP) (London, England) is planning to slash around 4,000 jobs from its global exploration and production unit, including 600 from its North Sea operations. For additional information, see January 21, 2016, article - BP Announces 4,000 Job Cuts.

"Bold, strategic moves shape our industry," claimed Royal Dutch Shell Chief Executive Officer Ben van Beurden. "The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell, to rejuvenate the company, and improve shareholder returns. Operating costs have reduced by $4 billion, or around 10% in 2015, and the company expects Shell's costs to fall again in 2016, by a further $3 billion. Synergies from the BG combination will be in addition to that. Together, these actions will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies, as streamlining and integration of the two companies continue."

He added: "Shell is taking impactful steps to refocus and reduce capital spending. Shell's capital investment in 2015 is expected to be $29 billion, an $8 billion or over 20% reduction from 2014 levels. Capital investment for Shell and BG combined in 2016 is currently expected to be $33 billion, around a 45% reduction from combined spending, which peaked in 2013. Asset sales for 2014 and 2015 now exceed $20 billion, well above the original plan of $15 billion set out in early 2014."

Last September, the company pulled the plug on exploration for crude in the Arctic. After drilling the 6,800-foot Burger J exploratory well in the Chukchi Sea north of Alaska in July, the company said that while there were indications of oil and gas, they were not enough to warrant further exploration. For additional information, see September 29, 2015, article - Shell Pulls Plug on Arctic Drilling Program.

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