Shell to cut up to 9,000 jobs in move to low carbon future

Royal Dutch Shell said it was cutting 7,000 - 9,000 jobs globally as it responded to the global slump in oil prices and looked to reposition itself as a green energy provider.

Shell said that the reorganisation would result in $2bn - $2.5bn in extra savings by 2022. The energy giant earlier this year announced cuts of $3bn - $4bn.

The job losses would be implemented by 2022 and included 1,500 people who were taking voluntary redundancy, the company said in a trading update on Wednesday.

"We have had to act quickly and decisively and make some very tough financial decisions to ensure we remained resilient, including cutting the dividend. But as hard as they were, they were entirely the appropriate choices to make," said chief executive Ben van Beurden.

"We have to be a simpler, more streamlined, more competitive organisation that is more nimble and able to respond to customers."

In July, Shell posted a second-quarter net loss of $18.3bn, compared to a net profit of $3bn in the second quarter of 2019, after it wrote down the value of oil and gas assets following a collapse in oil prices. The company earlier in the year cut its dividend for the first time since World War Two.

Covid-19 has caused global demand for oil to plummet. Brent crude futures started the year at close to $70 per barrel but tumbled below $20 a barrel at the peak of the pandemic.

The energy giant said third-quarter earnings were expected to be "at the lower end of the $800m to $875m range". Shell is in the midst of a cost-cutting drive that is expected to deliver annual savings of $2bn to $2.5bn by 2022.

Rival BP also cut its dividend and recently announced it was cutting 10,000 jobs out of its global workforce of 70,000.

Shell also said its oil and gas production would fall to around 3.04m barrels of oil equivalent per day due to lower output as a result of the coronavirus pandemic and hurricanes that shut down offshore platforms.

AJ Bell investment director Russ Mould said the job cuts were likely to receive a broadly positive response from the market, but warned that a talent drain "could undermine its recovery coming out of the pandemic and also hamper its attempts to head towards a greener future".

“The big argument employed by the oil majors when questioned on why they should be involved in a move towards cleaner sources of energy is that they have lots of transferrable skills and experience which can be applied in areas like renewables," he said.

“This industry has track record of cutting jobs in previous cycles and then facing a skills shortage down the road."