With no sign of oil price rebound, Shell wields axe again

Thu Jul 30, 2015 9:42am EDT
 
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By Ron Bousso and Karolin Schaps

LONDON (Reuters) - Royal Dutch Shell is to axe 6,500 jobs this year and step up spending cuts as it seeks to reassure investors it can withstand an extended period of lower oil prices, even through its planned $70 billion acquisition of BG Group.

The Anglo-Dutch company also announced plans to raise $50 billion from asset sales between 2014 and 2018 after its second-quarter profit dropped by 37 percent.

"Perhaps we left the impression that we will wait for the cavalry to arrive in the form of higher oil prices and that we were going to be lazy in terms of cost takeout," Chief Executive Officer Ben van Beurden said on Thursday.

"But what we also said at the time (of the BG deal announcement), perhaps not skilfully enough and not loud enough, is judge us on what we do and that is what today's message is all about."

Shell said it anticipated 6,500 staff and direct contractor reductions globally in 2015 from a total of nearly 100,000 employees, as it grapples with a halving in oil prices to around $55 per barrel in a year.

Like rivals BP, Statoil and Total it announced reductions in capital investments for a second time this year, shaving another $3 billion off its 2015 budget to bring it to $30 billion.

Around 20 to 30 percent of the $30 billion of asset sales expected between 2016 and 2018 will come from the downstream and midstream businesses, Shell said, leaving the expanded Shell-BG group to focus on fewer but larger and more competitive assets.

Shell will only make two major investment decisions this year, with many projects scaled back, delayed or canceled, van Beurden said. He hinted at further spending cuts if economic conditions worsened, including a steeper drop in oil prices.   Continued...

 
Shell's company logo is pictured at a gas station in Zurich April 8, 2015. REUTERS/Arnd Wiegmann