HOUSTON – Energy giant Shell has begun cutting jobs beyond previously announced reductions in its low carbon division as chief executive Wael Sawan seeks to trim costs and be more competitive with US rivals, people familiar with the matter said.
Roles are being eliminated on a division-by-division basis, with those affected offered options including redundancy packages or applying for jobs elsewhere in the company, according to the people.
Shell declined to comment on the number of jobs involved. The company laid out a plan to investors in June to reduce “structural costs” by as much as US$3 billion (S$4 billion) by the end of 2025.
“Achieving those reductions will require portfolio high grading, new efficiencies and a leaner overall organisation,” Shell said in an e-mail on Dec 21. “While no formal targets exist, we will continuously look to right-size the activities that deliver the most value.”
Mr Sawan pledged to be “ruthless” in improving Shell’s performance after taking the CEO job earlier in 2023.
The former divisional natural gas chief is making a concerted effort to close the stock’s valuation gap with United States rivals ExxonMobil and Chevron by selling assets and reducing low-return investments, including some in clean energy.
In October, Shell said 200 positions in its Low Carbon Solutions unit would be cut in 2024, about 15 per cent of the total.
Shell employed about 93,000 globally on a full and part-time basis at the end of 2022, more than double that of Chevron, despite the US company having a market value of 34 per cent higher.
Big Oil executives are cautious about the future despite reaping record 2022 profits in the wake of the worldwide disruptions triggered by Russia’s invasion of Ukraine.
Uncertainty over long-term fossil fuel consumption and investor demands for dividends and stock buybacks are prompting Western oil explorers to be more disciplined with spending.
Chevron, which agreed to buy Hess Corporation in October, recently instructed staff to “do better” in 2024 after failing to deliver on some key performance metrics.
Exxon has reduced headcount by 17 per cent since 2019 and earlier in December announced a plan to save US$6 billion in structural costs by 2027. BLOOMBERG
