Shell on Wednesday announced a major reorganization that will see thousands of jobs lost. The last major reorganization dates back to 2016 when Shell cut 10,000 jobs after the acquisition of BG Group.
English translation of an article published by the Dutch equivalent of the Financial Times.
Thousands of jobs at stake in Shell reorganization, not spared
IN BRIEF
Shell on Wednesday announced a major reorganization that will see thousands of jobs lost. The restructuring is also reportedly hitting the top layers of management. The restructuring is needed to reduce costs as oil prices have fallen sharply and the outlook has deteriorated. Shell is also working on it. a new strategy. This will be revealed early next year.
Shell announces a major reorganization on Wednesday morning, which will probably also cause thousands of jobs and the top layers of management will not be spared. The oil and gas multinational announces its cost-cutting measures in a trade update over the past third quarter. Well-informed sources say that.
It is not clear whether the position of Shell CEO Ben van Beurden is under discussion. In May, one of the largest shareholders suggested that Shell should start thinking about the succession of Van Beurden, the day after the oil and gas company cut its dividend for the first time since World War II. The 62-year-old Van Beurden has been CEO since January 2014.
It is to be expected that, as with the other major oil groups, at least many thousands of jobs will be lost. Shell employed 83,000 people worldwide at the end of 2019. According to one source, this is the largest reorganization in the company’s recent history. The last major reorganization dates back to 2016, when Shell cut 10,000 jobs after the acquisition of BG Group.
A spokesman for the company said on Tuesday that it would not respond to speculation and rumors.
Record net loss
Shell’s reorganization comes as no surprise. Earlier this year, it announced that it would be cutting the company considerably after the corona pandemic and the low oil price had punched a hole in the results. A write-off of more than $ 20 billion due to sharply depreciated oil and gas assets even led to a record net loss of $ 18 billion in the second quarter. In the previous three months, Shell already lowered its dividend by two-thirds for the first time since World War II.
The write-offs and losses illustrate the crisis in which the oil and gas industry finds itself. ShellRDSA’s share prices of € 10.36 + 0.14% and BPBP £ p212.55-2.59% have fluctuated at the lowest level in decades this year. At the beginning of this year, the Shell share was still trading at more than € 27, but less than € 11 was left on Tuesday.
There is a great need to cut costs, now that the effects of the corona pandemic persist and there is no prospect of a rapid recovery in demand for oil and oil products.
In an interview with the FD in July this year, Shell CEO Ben van Beurden outlined the scale of the crisis: “We have reduced our investment program by $ 5 billion to $ 20 billion a year. We originally wanted to grow that to $ 30 billion. So there is a huge gap between the ambition we had and what we think we can do now. There must also be a lot of costs out of the organization. So yes, we will have to slim down. ‘
Job losses in the oil sector
Number of employees on 12/31/2019
Preserved jobs: Planned layoffs
Cut jobs
Shell is not alone. The American oil company Chevron announced in May that it would cut 10% to 15% of its jobs and the British BP announced in June that 10,000 jobs will be lost at the company.
In the meantime, the pressure from governments and NGOs on oil and gas companies such as Shell is increasing to ‘green’. Due to climate measures by governments and changing consumer preferences, oil and gas are also facing increasing competition from other energy sources with lower CO₂ emissions, such as wind and solar energy and electric driving.
Shell will unfold a new strategy in February, but may already be lifting a tip of the veil on Wednesday.
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