LONDON (BLOOMBERG) - Royal Dutch Shell will cut as many as 9,000 jobs as Covid-19 precipitates a company-wide restructuring into low-carbon energy.
Job reductions of 7,000 to 9,000 are expected by the end of 2022, including around 1,500 people taking voluntary redundancy this year, Shell said on Wednesday (Sept 30) in a statement. The company sees sustainable annual cost savings of US$2 billion (S$2.74 billion) to US$2.5 billion by that time.
"We have to be a simpler, more streamlined, more competitive organisation," chief executive officer Ben van Beurden said. "We feel that, 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."
The move adds to the growing list of major announcements this year which has seen Big Oil slash dividends, take multi-billion-dollar writedowns and axe jobs following oil's coronavirus-induced plunge.
BP said in June it planned to cut 10,000 jobs as it moved into cleaner energy, Chevron intends to trim 10 per cent to 15 per cent of its global workforce, while Exxon Mobil is reviewing staffing country by country.
Shell began the process in May, when Mr van Beurden told staff in a memo that it was reshaping the company to make it leaner and more resilient and that there could be redundancies in the second half of the year, according to people with knowledge of the matter. The Anglo-Dutch major offered voluntary severance, scaled back recruitment and reviewed expatriate staff contracts.
The reorganisation is also designed to further Shell's expanded green ambitions. The company said in April that it planned 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 ultimately, it would do business with emission-free companies only.
The company also flagged on Wednesday that it expects oil-product sales volumes in the third quarter to be four million to five million barrels a day. Refining margins will be "significantly" lower than in the second quarter. It also sees post-tax impairment charges of US$1 billion to US$1.5 billion.
When contacted by The Straits Times, a Shell spokesman said: “Through reshaping Shell, we aim to enable our strategy, streamline our organisation and take out costs. As a result, we will be a simpler, more streamlined, more competitive organisation that is more nimble and able to respond to customers.
“However, no detailed guidance or final figures on where the impacts will be as this is still being worked through.”