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Shell to axe jobs as cost-cuts hit home

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Shell last week informed local staff that it was starting a round of job cuts, with a large portion of workers within the company asked to re-apply for their current positions.

While no fixed target has been set, it is estimated that about 250 jobs around Australia are likely to go as a result of the changes.

The round of job cuts follows Shell’s recent takeover last year of BG Group. The redundancies will remove many of the overlapping roles inherited through the takeover.

Shell had already flagged that it would axe about 2800 jobs worldwide as a result of the BG takeover, as well as a further 7000 around the globe as part of its response to the plunge in oil and gas prices.

The local job cuts add further uncertainty to workers in the local oil and gas industry, with sector players big and small all cutting staff on the back of the drop in oil and gas prices.

Shell’s Australian arm, headed by Andrew Smith, employs about 1200 people in Queensland, about 1000 people in Perth and another 100 or so in Melbourne.

Shell spokesman Paul Zennaro said the job cuts were consistent with the company’s statement last year that Shell and BG must be more competitive together than they were separately.

“Shell last week commenced conversations with employees about business efficiency and staffing levels — as a result of combining it with the previously BG-owned QGC — a process that will lead to job reductions,” Mr Zennaro said in a statement.

The formerly BG-owned QGC liquefied natural gas project in Queensland produced first gas last year, and Shell is now exploring the potential to incorporate its stalled Arrow LNG development into an expansion of the QGC plant.

Mr Zennaro said projects such as the QGC expansion and the looming start-up of its Prelude floating LNG plant off northern WA would create new jobs in the longer run.

“Shell maintains an ambitious growth agenda in Australia, and projects such as Prelude FLNG and QGC’s Charlie expansion will provide long-term jobs for Australians in regional locations,” he said.

“A majority of employees ­impacted by the reorganisation will be from corporate head offices, and where possible they will be provided with redeployment opportunities.”

Fellow oil and gas heavyweight Chevron has also been cutting workers in Australia as it wraps up construction of its $55 billion Gorgon LNG project off WA, while local players Woodside Petroleum, Origin Energy and Santos have each sacked hundreds of employees in the past year as they adjust to the sharp fall in earnings. Speaking at the LNG 18 conference in Perth earlier this month, Mr Smith said the Australian oil and gas industry needed to collaborate in order to improve its international competitiveness.

“The most important challenge way face today is to reduce costs and increase the efficiency of our operations,” Mr Smith said.

“And only then, once we are successful, will we be able to maintain our licence to operate and attract the capital to create a truly successful industry.”

Shell in February reported an 87 per cent slump in annual net profit to $US1.94bn.


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