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Anglo-Dutch Shell will slash its workforce by between 7,000 and 9,000 as part of cost-cutting efforts, with the cuts to take place until the end of 2022, the company said in a third-quarter update. Some 1,500 of these have agreed to take voluntary redundancy deals.
The supermajor plans between $2 and $2.5 billion annually by 2022 in sustainable savings, it said in the update, with most of that effected sooner rather than later as Shell strives for operating cost reductions of between $3 and $4 billion, to be achieved by the first quarter of 2021.
Shell had a workforce of about 83,000 people as of the end of last year. This means that the new layoffs will constitute close to a tenth of the total as the company tackles the new challenges posed by the pandemic.
“We have to be a simpler, more streamlined, more competitive organisation that is more nimble and able to respond to customers,” Shell’s chief executive, Ben van Beurden, said in an interview released with the update. “To be more nimble, we have to remove a certain amount of organisational complexity. In addition, we have to make sure we are making the best of the core capabilities we need to succeed.”
Besides a more streamlined company, the supermajor is also aiming, like its peer BP, to become a greener company. Earlier this month, Shell said it planned on cutting its oil and gas operations by as much as 40 percent as it shifted its portfolio in a renewable energy direction. Like BP, Shell plans to be a net-zero company by 2050.
Shell is currently looking at ways to cut costs in its biggest division, the upstream, by 30 percent to 40 percent via cutting operating costs and slashing capital expenditure on new oil and gas exploration and production projects.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.