Royal Dutch Shell Plc will cut as many as 9,000 jobs as Covid-19 accelerates a companywide restructuring into low-carbon energy.
The move reflects the challenge facing Big Oil as the pandemic persists, with some in the industry believing the era of demand growth is already over. As the crisis hastens the shift to cleaner energy, oil majors are axing jobs, taking multibillion-dollar writedowns and even slashing once-sacrosanct dividends.
At Shell, job reductions of 7,000 to 9,000 are expected by the end of 2022, including around 1,500 people taking voluntary redundancy this year, the company said Wednesday. It currently has about 83,000 employees. Sustainable annual cost savings of $2 billion to $2.5 billion are predicted by that time.
“We have to be a simpler, more streamlined, more competitive organization,” Chief Executive Officer Ben van Beurden said in a statement. “In many places, we have too many layers in the company: too many levels between me, as the CEO, and the operators and technicians at our locations.”
Shell also warned of lower sales in the third quarter, saying oil-product volumes were around 4 million to 5 million barrels a day, down from 6.7 million a day a year earlier. Oil-product trading results will fall short of the historical average and will be “significantly lower” than in the second quarter.
That shows the oil-trading bonanza that saved Shell’s last set of results won’t be repeated. The company also expects refining margins to be much lower than in the second quarter. Its full third-quarter financials, scheduled for Oct. 29, will include impairment charges of $1 billion to $1.5 billion.
Shell’s B shares were trading 0.6% higher to 962.6 pence as of 9:10 a.m. in London.