Oil giant Shell has said it will slash a further 2,200 jobs from its global workforce as it expects the oil price to remain “lower for longer”.
The firm said the move would bring the total number of staff and direct contractor roles being cut from the company from the start of 2015 to the end of this year to 12,500, up from its previous target of 10,300.
But it said the net number of job losses in 2016 would be fewer than 5,000, as it expects to continue recruiting this year.
The company, which sealed a mega-merger with BG Group in February, said the cost-cutting drive will include the loss of about 475 jobs at its UK and Ireland “upstream business”.
Paul Goodfellow, Shell’s vice president for the UK and Ireland, said it had taken the steps because the current market conditions remained “challenging”.
He said: “Our integration with BG provides an opportunity to accelerate our performance in this ‘lower for longer’ environment. We need to reduce our cost base, improve production efficiency and have an organisation that best fits our combined portfolio and business plans.
“As a result, we will reduce the size of the organisation supporting our UK and Ireland upstream business by around 475 people. We will look to implement the majority of this change during 2016.
“Following these changes, Shell will still remain a key employer in the North East of Scotland with around 1,700 employees.”
Updating on the progress of its efficiency drive announced in 2015, Shell said it had finished cutting an initial 7,500 jobs and was “well under way” with plans to axe a further 2,800 roles following its tie-up with BG.
The move comes after it revealed earlier this month that it may close three offices, including the former BG Group headquarters at Thames Valley Park, Reading; BG’s offices at Albyn Place, Aberdeen; and Shell’s Brabazon House office in Manchester.
It also gave workers at the Thames Valley site the option of applying for voluntary redundancy, while a separate voluntary severance programme has been rolled out to “some UK employees” because the oil price remains persistently low.
Mr Goodfellow added: “These are tough times for our industry and we have to take further difficult decisions to ensure Shell remains competitive through the current, prolonged downturn.
“In 2016, the number of job reductions in response to low prices and as a result of the BG integration is expected to total at least 5,000 globally. This number includes the 2,800 integration-related roles previously announced.”
Updating on the progress of its efficiency drive announced in 2015, Shell said it had finished cutting an initial 7,500 jobs and was “well under way” with plans to axe a further 2,800 roles following its tie-up with BG.
The move comes after it revealed earlier this month that it may close three offices, including the former BG Group headquarters at Thames Valley Park, Reading; BG’s offices at Albyn Place, Aberdeen; and Shell’s Brabazon House office in Manchester.
It also gave workers at the Thames Valley site the option of applying for voluntary redundancy, while a separate voluntary severance programme has been rolled out to “some UK employees” because the oil price remains persistently low.
Mr Goodfellow added: “These are tough times for our industry and we have to take further difficult decisions to ensure Shell remains competitive through the current, prolonged downturn.
“In 2016, the number of job reductions in response to low prices and as a result of the BG integration is expected to total at least 5,000 globally. This number includes the 2,800 integration-related roles previously announced.”
Shell announced that first-quarter profits had plummeted 58% to 1.6 billion US dollars (£1.1 billion) at the beginning of this month, as the falling oil price continued to hammer the sector.
Its downstream business, which includes refining, saw profits fall from 2.65 billion US dollars (£1.8 billion) to 2 billion US dollars (£1.3 billion) compared with the same period last year.
Despite the challenges facing the oil major, shareholders overwhelmingly backed chief executive Ben van Beurden’s £4.3 million pay packet during its annual general meeting on Tuesday.
Shell had a global workforce of about 90,000 people at the end of last year, while BG Group employed around 4,600.
The price of oil hit a seven-month high on Tuesday of 49.27 US dollars a barrel, but is still well below its peak in the summer of 2014 of about 115 US dollars a barrel.
