Shell to cut 20% exploration workforce: Reuters

Oil supermajor Shell (NYSE:SHEL) plans to cut its oil and gas exploration and development staff by 20%, according to a exclusive report from Reutersciting intentions to cut costs for what has long been a highly profitable segment of the oil giant’s business.

The new cuts follow earlier moves by Shell to reduce its workforce and costs in its renewable and low-carbon segments.

According to Reuters, citing unnamed company sources, Shell is restructuring its operations, targeting exploration, well development and underground units, with its UK and Dutch subsidiaries poised to take on the heaviest of the burden.

The workforce reduction is not set in stone and must still be discussed with employee representatives.

Shell’s new CEO, Wael Sawan, is on a cost-cutting drive to improve the company’s performance compared to its peers.

“Shell aims to create more value with fewer emissions by focusing on performance, discipline and simplification across the business. This includes reducing structural operating costs of $2-3 billion by the end of 2025,” Shell said in a statement published by Reuters.

On August 1stShell reported adjusted earnings of $6.3 billion for the second quarter, beating analysts’ consensus. The company has initiated a $3.5 billion share buyback program, which is expected to be completed by third quarter results.

The previous monthShell has paused construction of its biofuel facility in Rotterdam and announced it will scrap a refinery in Singapore. The two films, plus slower trading in its gas division, led to a write-down of about $2 billion.

Shell’s subsidiary Shell Nederland Raffinaderij announced in July that it would temporarily suspend on-site construction work at the 820,000 tonne-per-year biofuel facility at Shell Energy and Chemicals Park Rotterdam in the Netherlands “to address project delivery and ensure future competitiveness, given current market conditions,” the company said.

The move saw Shell abandon several of its climate commitments and commitments, triggering the resignation of several senior executives in its renewables division.

By Charles Kennedy for Oilprice.com

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