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Shell to cut up to 10,000 jobs in worldwide restructuring

May 28, 2009

More than 10,000 jobs at Royal Dutch Shell are under threat as Peter Voser, the oil giant’s new chief executive, announced a radical shake-up of the company.

In a series of moves designed to slash billions of dollars from Shell’s cost base and sharpen its focus in an era of low oil prices, the company said it was merging three divisions into two, creating a new one charged with project management and trimming the number of executive directors on its board from five to three.

“Organisationally, we are too complex, and our culture is still too consensus-oriented. Our costs are simply too high,” Mr Voser told staff in an e-mail before briefing 200 senior executives on the plans at a special meeting in Berlin.

While Shell refused to specify how many jobs would be lost in the reshuffle, analysts estimate it will be between 5 per cent and 10 per cent of the company’s 102,000 staff. Most of the cuts are expected in middle and senior management roles. About 24,000 Shell staff who work across the divisions that are due to be merged will be directly affected, although only some of these positions will be eliminated, a spokesman said.

The changes will initially affect Shell’s 200 most senior executives with some reports yesterday suggesting that more than 30 per cent of them would be dismissed. Hundreds of jobs in the UK, where Shell employs 9,000 staff, are also thought to be under threat.

The first casualty of the reorganisation came on Monday with the abrupt resignation of Linda Cook, Shell’s former head of gas and power and a 29-year veteran of the company.

Her division will be folded in with two other businesses that had previously been run as separate units: exploration and production – Shell’s core oil production business and the engine of its profits – and oil sands. Under the new structure, which places natural gas at the centre of Shell’s business alongside crude oil, these will be run together along regional lines: “Upstream Americas” and “Upstream International”.

In a drive to improve Shell’s patchy record delivering important projects on time and to budget, a new business – “Projects & Technology” – will combine all of Shell’s activities in these areas.

Shell is also reducing the size of its corporate affairs division, which is headquartered in The Hague, where it employs 2,000 people.

Mr Voser takes over from Jeroen van der Veer on July 1, when the changes will also be implemented, although the bulk of job cuts are not expected before autumn.

“These changes will increase our focus, accelerate our plans to reduce complexity, corporate overheads and costs, and result in faster decision-making and delivery,” Mr Voser said.

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