Shell to cut up to 9,000 jobs in company overhaul

Sept. 30, 2020
Shell plans to cut between 7,000 and 9,000 positions by end 2022, potentially affecting more than 10% of its workforce. The total includes 1,500 people who have volunteered to leave the company this year.

Shell plans to cut between 7,000 and 9,000 positions by end 2022, potentially affecting more than 10% of its workforce. The total includes 1,500 people who have volunteered to leave the company this year.

The layoffs are part of a major overhaul aimed at cutting costs and simplifying the company's structure toward low-carbon energy. Shell expects that this overhaul will save up to $2.5 billion in annual cost by 2022.

“We have to be a simpler, more streamlined, more competitive organization that is more nimble and able to respond to customers," said Chief Executive Officer Ben van Beurden in a statement. "Make no mistake: this is an extremely tough process. 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.”

In June, Shell wrote down the value of its assets by as much as $22 billion and slashed its oil price forecasts (OGJ Online, June 30, 2020). Shell has committed to achieving net zero carbon emissions from its own operations by 2050.

According to van Beurden, layers of management would be cut. “We have looked closely at how we are organized and 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.”

Shell said that its “upstream” oil and gas production would remain “critical” as it invests more in clean energy and will “be run to ensure a strong flow of cash to Shell.” It also plans to grow its LNG business but will continue to shrink its refinery capacity.

The oil company earlier this year cut its dividend for the first time since the end of the second world war and revealed a net loss of $18.3 billion for second-quarter 2020 when global oil prices tumbled to record lows in response to the coronavirus outbreak.

The company plans to announce its third-quarter financial results in October and warns investors that its oil and gas production will drop sharply, and revenue from the gas business and commodity trading division will also decline.