Shell cut 6,500 jobs manage oil price downturn

Shell to cut 6,500 jobs to manage oil price downturn

7:22 AM, 31st July 2015
Shell to cut 6,500 jobs to manage oil price downturn
Ben van Beurden, CEO of Shell. (File photo)

LONDON, UK: Royal Dutch Shell said it will cut 6,500 jobs in 2015, as it faces an oil price downturn, which could last for several years.

To be resilient in a world where oil prices remain low for some time, we are taking a prudent approach, pulling on powerful financial levers to manage through this downturn, mentioned Shell’s chief executive officer.

“Shell’s integrated business and our performance drive are helping to mitigate the impact of low oil prices on our bottom line. We’re successfully reducing our capital spending and operating costs, and delivering a competitive performance in today’s oil market downturn.

And anticipate some 6,500 staff and direct contractor reductions in 2015,” said Ben van Beurden, CEO of Shell, while updating shareholders and investors at a presentation in London.

In these challenging times for the industry, the operating costs are expected to fall by over $4 billion, or around 10 percent in 2015, as its sustainable cost reduction programmes gather pace. The company plans to reduce costs further in 2016, Beurden said.

For 2015 capital investment is expected to be around $30 billion, a reduction of $3 billion since Shell’s last update in April, and $7 billion from 2014 levels, reflecting cost reductions, project cancellations and re-phasing of growth options. Overall this is a reduction of 20 percent from 2014 levels and 35 percent compared to 2013, he informed.

Underlying performance in each of the focus areas of resources plays, oil products and the mature upstream ‘engines’ business has improved compared with 2014, as we continue to restructure there, Beurden said during the presentation.

Asset sales should total $20 billion for 2014 and 2015 combined, despite weak market conditions. At the same time, Shell is continuing to invest in significant new projects, which should add material cash flow and free cash flow in the medium term, he added.

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