BUSINESSDAY ONLINE: Shell mum as speculation of 3,600 jobs loss gathers momentum

EJIOFOR ALIKE

Mum is the word at the Shell companies in Nigeria as speculation that the parent company is allegedly planning to lay off 3,600 jobs in its worldwide operations.

The proposed job cut is part of the restructuring exercise in Europe’s largest oil company.

Analysts view the move as part of Shell Group’s plan to join rival BP in trying to cut costs and simplify its operational structure.

Royal Dutch Shell is planning to reorganise many departments, including finance, a move that will lead to 3,600 job cuts out of about 108,000 people it employs worldwide.

Shell’s chief executive, Jeroen Van der Veer, was quoted by a Dutch newspaper de Volkskrant as saying in early December 2007 that the group’s production costs had increased by 65 percent in two years.

Shell’s financial director Peter Voser also told the company staff that he wants a “leaner and meaner” department in 2008. Officials of Shell Companies in Nigeria are not willing to comment on the restructuring exercise.

However, speculation is rife that the parent company is negotiating outsourcing 3,200 jobs as part of the deal.

According to sources, the company is in negotiations with three unnamed companies about outsourcing the functions of 3,200 employees; mostly in information technology (IT) department and that the contracts will be signed in March 2008.

Shell had announced in September 2007 that it would contract out some IT work as part of its move to create greater synergies.

By the terms of the proposed arrangement, the three companies will provide the services for Shell Group in a farm out deal, worldwide.

BusinessDay gathered that the decision to outsource the jobs was taken at a board meeting held shortly before Christmas.

It has also been confirmed that with effect from January 8, 2008 the company will be holding a series meetings it calls “Facing Change Meetings” with staff to work out modalities for the plan.

As part of the restructuring exercise the three subsidiaries that make up the Shell Companies in Nigeria last year began series of measures to save at least $100 million (N12.5 billion) in the next few years.

In a move to offset rising costs and lost revenue as security concerns in the Niger Delta curtail crude oil production, the three subsidiaries merged into ‘one’ Shell.

With the merger of the three companies, the position of managing director of Shell Petroleum Development Company (SPDC) of Nigeria, which Basil Omiyi occupied, was scrapped.
Omiyi, however retained his second position as the chairman of Shell Companies in Nigeria.

The position of Chima Ibeneche, as the managing director of Shell Nigeria Exploration and Production Company (SNEPCO) was also scrapped and he was posted to replace Chris Haynes, as the managing director of Nigerian Liquefied Natural Gas Limited (NLNG).

Ibeneche became the first Nigerian to occupy that position.

Analysts view Ibeneche’s appointment as Shell’s appreciation of the achievement of SNEPCO in actualising the dream of the Bonga deepwater project.

SNEPCO recorded a landmark in global oil and gas industry when it brought on stream the world-class Bonga oilfield, which is producing in excess of 220,000 barrels a day.

Shell is also planning to embark on other measures to reduce costs in its operations in the country.

The measures are likely to include reduction of its Nigerian workforce to check rising costs and falling oil revenues caused by the attack on its workers and installations by the Niger Delta militants.

Royal Dutch Shell had told its 4,500 Nigerian employees through an internal memo dated May 30, 2007 that it would implement a series of measures to cut costs and boost productivity.

The internal memo also stated that the changes would amount to a three-year austerity programme.

Although the memo did not specify what cost savings measures the company would adopt but company sources had hinted that several hundreds of job cuts were being planned.

However, the jobs most likely to be affected are those in the information technology (IT) division.

31 December, 2007 08:06:00

http://www.businessdayonline.com/National/1808.html

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