Since it was reported that Royal Dutch Shell is mulling to offer staff voluntary severance as part of measures to cut costs following the slump of oil price caused by collapse in demand as COVID-19 pandemic ravages the world, workers of the oil giant have been apprehensive.
According to Bloomberg sources, the Shell is considering the measure as the price of a barrel of Brent is trading at nearly half of what it was at the beginning of the year. To mitigate the impact of the coronavirus, the Company is planning on offering some staff voluntary severance.
In a note to its staff, Shell CEO Ben van Beurden said the Dutch oil major was working to become leaner and more resilient, according to the Bloomberg sources who saw the correspondence.
The move comes after Shell cut its dividend in April for the first time since 1945—by two-thirds—in what even Shell considered an “inevitable moment” given the oil price route and uncertainty around demand. Shell also cut spending in March by $5 billion per year compared to 2019 levels to $20 billion.Shell may also make more job cuts in the second half of the year, the sources said.
Shell said it would “go through a comprehensive review of the company,” adding that “where appropriate, we will redesign our organization to adapt to a different future and emerge stronger,” Shell told Bloomberg.
Royal Dutch Shell had similarly taken the same measure during the 2015 economic downturn when oil prices tumbled. In July 2015, the oil major announced it has shed 6,500 jobs as part of cost-cutting plans as it seeks to counter falling oil prices.
The job cuts comprised part of its $4billion reduction in operating costs. Shell then had about 94,000 employees, and said the job cuts affected contractors as well as Shell employees, and included job losses at its operations in the North Sea and cuts resulting from divestments in Nigeria.
The current oil price crunch has caused almost all companies to take a look at their financial plans. Already, the oil and gas industry in Texas alone has seen more than 30,000 jobs cut, and that figure is weeks old and will likely grow.
Also, Shell reportedly evacuated about 60 foreign staff from Iraq’s Basra Gas Company as a security precaution following a protest over pay.
Even as the United States begins to emerge from its restrictive lockdowns that has taken a chunk out of oil demand, it is widely expected that this demand will not snap back full force in the coming weeks, and many oil and gas companies—including the national oil companies–are prudently reviewing how their current strategies will fit into this gloomy outlook on oil demand and are making painful changes as necessary.
Also, Shell evacuates Iraq staff. Royal Dutch Shell (NYSE: RDS.A) said that it evacuated around 60 foreign staff from Iraq’s Basra Gas Company as a security precaution following a protest over pay.
