Royal Dutch Shell Plc has announced plans to cut between 7,000 and 9,000 jobs globally before the end of 2022. Shell’s 83,000-strong workforce will reduce by 11%, including the 1,500 employees that took voluntary redundancy earlier this year.
Shell is cutting costs due to the global crude oil crash and intends to focus more on clean energy. Shell expects its cost-cutting measures to save up to $2.5 billion each year.
Reducing costs is vital for Shell’s plans to move into the power sector and renewables where margins are relatively low.
Competition is also likely to intensify with utilities and rival oil firms including BP and Total all battling for market share as economies around the world go green.
Fuel sales recovery
In an operations update, Shell also said its oil and gas production was set to drop sharply in the third quarter to around 3,050 barrels of oil equivalent per day due to lower output as a result of the coronavirus pandemic and hurricanes that forced offshore platforms to shut down.
Shell, the world’s largest fuel retailer, saw a recovery in fuel sales in the third quarter from lows hit in the previous quarter as some countries gradually emerged from lockdown measures.
In the second quarter, Shell narrowly avoided its first quarterly loss in recent history, helped by booming trading business. It, however, announced nearly $16.8 billion in impairment charges after sharply lowering its outlook for oil and gas prices in the wake of the pandemic.
Shell said it will take another impairment charge of $1 to $1.5 billion in the third quarter.
