Royal Dutch Shell has announced plans to cut between 7,000 and 9,000 jobs - around 10% of its global workforce - before the end of 2022 as part of a major corporate restructuring plan which the oil giant says will keep it in pace with the global energy transition.
Ben van Beurden
Royal Dutch Shell CEO Ben van Beurden
The Anglo-Dutch energy company, which employed 83,000 people at the end of 2019, anticipates annual savings of as much as $2.5 billion (€2.13 billion) as a result of the cost-cutting plan.
The staff cuts come as Europe's biggest oil company prepares to invest more in a low-carbon energy future whilst simultaneously dealing with the fallout of the coronavirus pandemic, which has seen demand for oil slashed.
“Make no mistake: this is an extremely tough process,” said Shell CEO Ben van Beurden. “It is very painful to know that you will end up saying goodbye to quite a few good people. But we are doing this because we have to, because it is the right thing to do for the future of the company.”
The job losses - which include 1,500 people who are taking voluntary redundancy - were announced at the bottom of a press release updating its third-quarter 2020 outlook.
The Shell CEO said that layers of management would need to be cut.
“We have to be a simpler, more streamlined, more competitive organisation,” van Beurden said. “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.”
Other sources of savings will likely come from other trends that emerged during the Covid-19 outbreak such as remote working, less travel and less reliance on outside contractors.
The company said that it's "upstream" oil and gas production would remain as a "critical" part of the company "to ensure a strong flow of cash to Shell” as it invests further in clean energy.
The plans to downsize come after the company cut its dividend for the first time in the post-war era earlier this year, revealing a net loss of $18.3 billion (€15.6 billion) in the second quarter of 2020 when global oil prices fell to record lows.
The downsizing would see an eventual reduction in its number of plants to less than 10, down from the 15 it is involved in today.
Covid-19 has severely damaged the oil industry with many companies taking steps towards low-carbon energy to help reduce global carbon emissions and stay in line with international climate targets.
In June, BP announced 10,000 job cuts - 15% of the company's staff - by the end of the year. The company is also understood to be planning a radical shake up of its offices which may involve halving its property portfolio, possibly even its global headquarters in London's St. James' Square.
Shell has not given a timescale for the job cuts, though it is due to release its third-quarter results on October 29.
Van Beurden said: “We do not have an exact figure because the details are still being worked out and we have never had a target to reduce a particular number of jobs. But we can say that, because of the efficiencies we expect to gain, we will reduce between 7,000 and 9,000 jobs by the end of 2022.”
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