Royal Dutch Shell Plc has announced on Thursday that it would be laying off up to 10,000 of its staff across its global operational bases, as they merge with BG Group and deal with lowering oil prices.
This development is amid its steepest fall in annual profits in 13 years, following a fourth quarter in which the oil company say they suffered a 44 per cent drop in earnings.
Shell’s Chief Executive Officer (CEO), Mr. Ben Van Beurden, said the company is embarking on the measure to refocus its operations in 2016. He disclosed that the company made $1.8bn for the fourth quarter of the year, compared with a $4.2bn profit for the same period the year before. He also announced that Shell would be taking over BP, its arch-rival. BP announced a profit slump of 51% to $5.9bn for 2015 and a further 3,000 job cuts earlier this week.
The completion of the BG transaction, which we are expecting in a matter of weeks, marks the start of a new chapter in Shell, rejuvenating the company and improving shareholder returns.
We are making substantial changes in the company, as we refocus Shell, and respond to lower oil prices. As we have previously indicated, this will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies.
In 2015, we significantly curtailed spending by reducing the number of new investment decisions and designing lower-cost development solutions.
In 2016, he said Shell had exited the Bab sour gas project in Abu Dhabi, and was postponing final investment decisions on LNG Canada and the Bonga South-west in deep water Nigeria.
Operating costs and capital investment have been reduced by a total of $12.5 billion as compared to 2014, and we expect further reductions in 2016.
According to him,
Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that. Shell’s dividends for 2015 were $1.88 per share, and are expected to be at least $1.88 per share in 2016, as previously announced.
Beurden also said Shell might take further drastic actions if the need arises.
As a result of our actions in 2015, we have retained a strong balance sheet position, with 14% gearing.
The group, in its financial report of the fourth quarter of 2015, has made a decision to pull out of the Bab sour gas project in Abu Dhabi, as well as postpone final investment decisions, FIDs, on both LNG Canada and the Bonga South-West deep water project in Nigeria.
Meanwhile, the U.S. Bureau of Labor Statistics has released information showing that the number of people employed in the oil and gas extraction business in the U.S. has fallen by about 100,000 since October 2014. Different oil companies and their suppliers are reported to have also cut back hard on investment and jobs as a result of the sharp decline in oil prices.
Shell’s announcement came just as the National Union of Petroleum and Natural Gas Workers (NUPENG) and Nigeria Labour Congress (NLC) held a meeting with the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, in Abuja on Thursday, in a renewed effort to protect the jobs of their members in the country’s oil and gas sector.