Shell plans major overhaul around climate drive, CEO tells employees

LONDON — Royal Dutch Shell will announce a major restructuring by the end of the year as the energy company prepares to accelerate its shift towards low-carbon, CEO Ben van Beurden told employees according to a company source.

In a video interview published on Shell’s internal website, van Beurden said that the restructuring would involve job cuts as part of broad cost reductions, although no figures have been decided yet, according to sources who saw the interview.

“Ben spoke about positioning the company in the energy transition,” one of the sources said. “The company will announce the new shape of the organization by the end of the year.”

The new structure will not take effect before 2021.

“Over the coming months we will go through a comprehensive review of the company. Where appropriate we will redesign our organization to adapt to a different future and emerge stronger,” Shell said in a statement.

The review, which could result in the first major change to Shell’s structure in over a decade, comes after the Anglo-Dutch company set out ambitious plans to reduce greenhouse gas emissions to net zero by 2050 and announced a cut in its dividend for the first time since the 1940s.

The company is not alone, with BP also planning a historic restructuring as new CEO Bernard Looney sets out to “reinvent” the British company with renewables and low-carbon energy. Italy’s Eni also plans a major overhaul.

In the video, Shell’s van Beurden said the strategic review was a result of the economic crisis caused by the coronavirus pandemic, something he believes will accelerate the world’s transition towards greener energy.

Shell recently announced a voluntary redundancy scheme in response to a sharp drop in revenue as oil prices tumbled, a company spokeswoman said on Tuesday.

It is also already planning to reduce 2020 capital expenditure to $20 billion at most from a planned level of about $25 billion, and cut an additional $3 billion to $4 billion off operating costs over the next 12 months.

Shell said it will provide more details about its strategy in an investor event later this year.

(Reporting by Ron Bousso; Editing by Kirsten Donovan)