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Shell CEO warns of further job cuts in recession

Bloomberg News

May 7, 2009, 8:22P

Royal Dutch Shell, Europe’s largest oil company, may be forced to cut jobs further in the event of a severe economic slowdown.

“We don’t know how long the recession will last,” Chief Executive Officer Jeroen van der Veer said Thursday in an interview in Lausitz, Germany. “We have additional cost savings and that can be jobs.”

Shell, which posted a 62 percent drop in first-quarter earnings, is seeking to reduce costs after oil prices plunged more than $100 from a record. Chief Financial Officer Peter Voser, who will take over from Van der Veer in July, expects gearing, the ratio of debt to equity, to triple by the end of the year as Shell funds the industry’s biggest spending program.

Shell’s CEO declined to give a figure on possible job cuts or say where they would come from. Shell’s workforce shrank to 102,000 last year from 119,000 in 2003, according to Bloomberg data.

“It is for every refinery manager to make sure that he is from a work force point view efficient, and that applies for an oil rig, an oil installation,” Van der Veer said at the Shell Eco-marathon Europe event.

The oil producer has already delivered “important cost savings” by renegotiating contracts with suppliers, he said, without elaborating.

Oil prices are likely to be depressed for the next 12 to 18 months, Voser said last month. U.S. oil futures, down 60 percent from July’s record, traded at $57.59 a barrel today.

BP, Shell’s smaller rival, shed about 3,000 posts last year as part of an internal re-organization designed to help close a “performance gap” with rivals. BP has said it will meet a company target of reducing the overall headcount by 5,000 by June.

Van der Veer declined to comment on criticism from a shareholder adviser over his pay last year, saying it’s “up to the board” to set salaries.

Shell shareholders should vote against a remuneration package for management at their May 19 meeting as certain performance targets haven’t been met, Pensions Investment Research Consultants Ltd. said Wednesday.

Van der Veer received total compensation of $15.1 million last year, Shell said in its annual report in March. His base salary and bonus was $8.34 million. That compares with compensation of $8.96 million in 2007, including pension benefits and share-option gains, according to Bloomberg calculations. Shell didn’t disclose Van der Veer’s total 2007 compensation in its report



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