Shell to cut up to 9,000 jobs as worldwide demand for oil slumps

Shell plans to cut between 7,000 and 9,000 jobs worldwide due to a collapse in demand for oil mid the coronavirus pandemic.

The oil company said the job losses would be complete by the end of 2022.

Bosses also told investors that this includes around 1,500 employees who have agreed to take voluntary redundancy this year.

It comes as the worldwide demand for oil has slumped with prices dropping, driven mainly by a reduction in the use in transport – particularly aviation.

People are flying much less due to Covid-19, with countries making entry requirements more stringent and flight routes scaled back.

Last month the International Energy Agency published a quarterly forecast saying that ‘the aviation and road transport sectors, both essential components of oil consumption, are continuing to struggle’.

Shell said the job cuts are part of a major cost-cutting programme.

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 said 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.

Mr 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’.

He also said that the company would look to pivot away from selling oil towards new products, for example ‘developing new types of biofuels and making them commercially viable […] or developing hydrogen for heavy-duty road transport in areas where nothing exists yet.’

In June, rival BP said it was cutting around 10,000 jobs from its workforce to cope with the impact of the virus.

Shell said it expects that the cost-cutting measures will secure annual savings of between £1.5 billion to £1.9 billion by 2022.

This will also partially contribute to a previously announced reduction in the company’s operating costs by £2.3 billion-£3.1 billion by the first quarter of 2021.

Shell also told investors on Wednesday that it expects third-quarter production to be between 2.15 million and 2.25 million barrels of oil equivalent a day.

Daily production levels have been impacted by between 60,000 and 70,000 barrels due to hurricanes in the Gulf of Mexico.

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