Shell to cut up to 9,000 jobs following collapse in oil demand

Oil giant Shell is to cut 7,000 to 9,000 jobs.

The cuts will be implemented by 2022. The job losses include around 1,500 employees who have agreed to take voluntary redundancy this year.

The cuts are part of a major cost-cutting programme after the business was bit by the slump in demand for oil and a subsequent dive in prices.

Shell, which had 83,000 employees at the end of 2019, estimates that the reorganisation will lead to annual savings of $2 billion to $2.5 billion by 2022.

Ben van Beurden, chief executive of Royal Dutch Shell, said: “We have to be a simpler, more streamlined, more competitive organisation that is more nimble and able to respond to customers.

“To be more nimble, we have to remove a certain amount of organisational complexity.”

He added that the company is looking at a raft of other areas where it can cut costs, such as travel, its use of contractors and virtual working.

Van Beurden said the pandemic has shown the company it can adapt to working in new ways but stressed that “a large part of the cost saving for Shell will come from having fewer people”.

Shell said in a statement: “Reduced organisational complexity, along with other measures, are expected to deliver sustainable annual cost savings of between two billion dollars to 2.5 billion dollars by 2022.

“This will partially contribute to the announced underlying operating cost reduction of three billion dollars to four billion dollars by the first quarter 2021.

“Job reductions of 7,000 to 9,000 are expected - including around 1,500 people who have agreed to take voluntary redundancy this year - by the end of 2022.”

Rival BP earlier this year announced plans to cut around 10,000 jobs as part of chief executive Bernard Looney's plans to rapidly expand its renewables business and reduce oil and gas production.

In a results update, Shell said oil and gas production was set to drop sharply in the third quarter to around 3,050 barrels of oil per day due to lower output as a result of the coronavirus pandemic and hurricanes that forced offshore platforms to shut down.