ShellJan21

Royal Dutch Shell has announced plans to cut 10,000 jobs and direct contractor positions by the end of 2016 in a bid to cut costs amid a fall in oil prices.

The job cuts will occur across Royal Dutch Shell as well as BG Group, following an acquisition as part of a streamlining and integration of the two companies.

In April 2015, Shell announced plans to buy BG Group in $70bn deal to become a dominant entity in the LNG market.

Royal Dutch Shell CEO Ben van Beurden said: "Bold, strategic moves shape our industry. The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell, to rejuvenate the company, and improve shareholder returns."

"Shell’s drive to improve competitive performance is delivering at the bottom line. Operating costs have reduced by $4bn, or around 10% in 2015, and the company expects Shell’s costs to fall again in 2016, by a further $3bn.

"Synergies from the BG combination will be in addition to that. Together, these actions will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies, as streamlining and integration of the two companies continue.

Shell’s capital investment in 2015 is expected to be $29bn, an $8bn or more than 20% reduction from 2014 levels.

Capital investment for Shell and BG combined in 2016 is currently expected to be $33bn, around a 45% reduction from combined spending, which peaked in 2013.

"The completion of the BG transaction will mark the start of a new chapter in Shell."

Shell noted that asset sales for 2014 and 2015 now exceed $20bn, well above the planned $15bn that was set out in early 2014.

Preparations are also underway for $30bn of asset sales in 2016-18, assuming the successful completion of the combination of both companies.

Beurden added: "The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell, to rejuvenate the company, and improve shareholder returns.

"In addition to divestments, Shell has taken impactful decisions in 2015 to reduce longer term, low return upstream positions, such as the exit from Alaska exploration for the foreseeable future, cancellation of Carmon Creek heavy oil project, and exit from shales positions in multiple countries."

During fourth quarter, the company is expecting a profit between $1.6bn and $1.9bn compared to $4.2bn it recorded during corresponding quarter a year ago.


Image: Royal Dutch Shell head office in Carel van Bylandtlaan, The Hague. Photo: courtesy of P.L. van Till.