Royal Dutch Shell is set to slash about 7,000 to 9,000 jobs by 2022, that is more than 10 per cent of its workforce, amidst the huge dip in demand for oil and gas. Of these, about 1,500 have agreed to take voluntary redundancy this year. The Company is laying off as part of cost-cutting measures and its plan to shift to low-carbon energy.
The move is expected to save the British-Dutch multinational oil and gas company, which has a workforce strength of about 83,000, at least $2 billion annually.
Ever since the pandemic, the Company, which has a 6,000-strong workforce in the UK, has witnessed low output, as some of its offshore units had to be shut down, owing to the outbreak as well as hurricanes. The Company expects further fall in production in the third quarter, to the equivalent of about 3,050 barrels of oil a day. Profits have fallen significantly, with net income falling by 46 per cent, to $2.9 billion, in the first quarter and by 82 per cent, that is, about $638 million, in the second quarter. In Q3, it expects to earn just about $800 to $875 million.
Five months ago, the Company had cut its dividend for the first time since World War II.
The Company also lost six of its permanent employees and an equal number of contract workers to COVID.
Though the job cuts have been a tough call to make, there was no other option for Shell, which is now focussing on becoming more competitive, lean, agile, organised and simple, so that it can serve its customers better. In the next two decades or so, Shell aims to become a net-zero emissions energy business, for which it will have to change its offerings and switch to solutions, such as low-carbon electricity, low-carbon biofuels and hydrogen.
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