Shell shares slide despite axing 9,000 jobs
Shares in Shell tumbled to a new low on Wednesday after the oil titan announced 9,000 job cuts following a historic crash in oil prices.
Europe's largest oil company is culling 10pc of its workforce following a vow earlier this year to embrace green energy and slash its carbon emissions to net zero by 2050, in the latest sign of seismic changes sweeping the oil industry.
Shell launched an extensive review last month aimed at restructuring the company in response to low oil prices following a Covid collapse in demand, and the shift to a post-oil world where fossil fuel drilling becomes less lucrative.
The firm has said the job cuts will help it save up to $2.5bn (£1.9bn) annually by 2022.
Much of these cuts will come from Shell's upstream division, company sources said, signalling a lasting move away from the business of drilling for oil.
The axe is likely to fall hard on Shell's 6,500 staff who work on North Sea upstream projects, which aim to open up new sources of oil.
Oil companies have been under tremendous pressure this year after the coronavirus pandemic triggered a collapse in prices, with the International Energy Agency (IEA) describing April as the worst month ever for the industry.
Ben van Beurden, chief executive of Shell, said: "Make no mistake: 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."
The news comes five months after Shell slashed its dividend for the first time since the Second World War in response the crisis.
The company's A shares fell 2pc to 963.9p - below their March nadir of 970.8p - while the B shares dropped 1.7pc to 940.2p.
Mr Van Beurden is to take direct control of multiple Shell divisions of in an effort to simplify its operations and shore up its finances. He hinted that this would include technical staff, the mergers and acquisitions team and the marketing division.
He said: "We have looked closely at how we are organised and we feel that, in many places, we have too many layers in the company.
"Too many levels between me, as the chief executive, and the operators and technicians at our locations."
Shell also issued a stark trading update ahead of its third quarter results at the end of October. Its prized upstream division is expected to post a loss after warning of significantly lower oil production for the quarter.
Output levels have been sharply reduced over the three months after hurricanes and measures related to the pandemic forced the closure of several offshore platforms owned by the group.
Mr Van Beurden said on Wednesday that 12 people working for the company had died of Covid-19 since the start of the pandemic.
Meanwhile Shell said its chemicals business, gas division and oil products unit will suffer a one-off earnings hit from tax charges to the tune of hundreds of millions of dollars.
Some experts are worried that the jobs lost this year from the oil industry may never return as the fossil fuel industry shrinks permanently due to the rise of alternative energy sources. Rival oil major BP said earlier this year that following more than a century of steady growth, the world has likely now passed peak oil demand.
