Hit by plunging oil prices connected to the coronavirus, energy company Royal Dutch Shell is set to eliminate between 7,000 and 9,000 positions by the end of 2022., the company said on Wednesday.
With a barrel of Brent crude oil currently selling for about US$41, oil prices have recovered somewhat from the lows of below US$20 at the beginning of the year.
But prices are still well below the level that some producers would find profitable, and are below 2016 prices. With an apparant glut of oil on the market and purhases down due partially to people cutting travel to a bare minimum, it looks like oil will stay low for some time to come.
Meanwhile, some 1,500 members of staff have accepted voluntary redundancy this year.
With a global workforce of abut 80,000 people in some 70 countries, the cuts represent about 10 percent of Shell’s employees.
The company wants the plan to create annual savings of between US$2.0 billion and US$2.5 billion. The plan also aims to streamline the business in response to the fallout from the COVID-19 pandemic.
The savings will go a long way to help reach US$3.0-$4.0 billion efficiency drive the company announced in March and runs to 2021.
Shell alerted the market back in July that job cuts would be happening, after thh company posted a massive net loss of US$18.1-billion for the second quarter.
The Anglo-Dutch company also warned on Wednesday that third quarter earnings would be hit by post-tax impairment charges of between US$1.0-US$1.5 billion.
“This is an extremely tough process. It is very painful to know that you will end up saying goodbye to quite a few good people,” Chief Executive Ben van Beurden said in an interview on the company website.
“But we are doing this because we have to, because it is the right thing to do for the future of the company.
“We have to be a simpler, more streamlined, more competitive organization that is more nimble and able to respond to customers.”
The shake up in the industry is also hitting Shell’s main British rival BP, which is axing around 10,000 jobs or 15 percent of its total workforce in response to the virus turmoil.