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Shell sees no ‘quick recovery’ as energy company cuts 5,000 jobs

Daily Telegraph

Royal Dutch Shell is “not expecting a quick recovery” after shedding 5,000 jobs in a global restructuring and seeing profits drop 73pc on lower oil and gas prices.

By Rowena Mason
Published: 7:59AM GMT 29 Oct 2009

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Europe’s biggest energy company made $2.99bn in profits on a cost of supplies basis – a measure that strips out the effect of changing inventories – slightly beating analyst expectations. Revenue fell 43pc to $76bn.

Peter Voser, the chief executive who took over in July, said 10pc of the oil giant’s staff would be leaving, after profitability in both upstream and downstream divisions was sharply affected by the recession.

“We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery,” Mr Voser said.

He said earlier this year that the changes would affect management more than other levels, with 20pc of senior jobs cut to 600 positions in a reorganisation of divisions.

Shell has reduced costs by $1bn this year, not quite matching the $2bn of savings before foreign exchange movements stripped out of its rival, BP.

Oil and gas production remained steady at 2,926 thousand barrels of oil equivalent today, with new fields coming online offsetting declining fields. Its output is set to benefit further from a new ceasefire with Nigerian rebels disrupting production in Africa.

The capital expenditure of energy giants has been under pressure from an oil price 41pc lower and natural gas prices down 62pc, but Shell still paid out $7bn on new projects this quarter and made the decision to invest in Australia’s giant Gorgon gas field.

The company has staked its future on a number of technically difficult fields, including unconventional reserves at oil-sands in Canada and deepwater projects in the Gulf of Mexico and Brazil.

However, the company increased its dividend payment from 40 cents per share to 42 cents, in contrast to the freeze on increases at BP.

The other British oil supermajor, BP, reported results well-ahead of analyst expectations earlier this week on greater cost-cutting, while ExxonMobil, the US giant, will release results later today.

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