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Royal Dutch Shell to axe extra 2,200 jobs as oil prices stay low

Published 25/05/2016

Shell said the net number of job losses in 2016 would be fewer than 5,000
Shell said the net number of job losses in 2016 would be fewer than 5,000

Royal Dutch Shell will axe a further 2,200 jobs from its global workforce as it continues to grapple with lower oil prices.

The oil major said the move would mean 12,500 staff and contractor roles would be lost between the start of 2015 and the end of this year, up from its previous target of 10,300.

The firm, which sealed a £35 billion takeover of BG Group in February, said the cost-cutting drive would include 475 jobs at its UK and Ireland upstream business.

But it said the net number of job losses in 2016 would be fewer than 5,000 as it expects to keep recruiting this year.

Paul Goodfellow, Shell's vice president for the UK and Ireland, said it had taken the steps because the market conditions remained "challenging".

He said: "Our integration with BG provides an opportunity to accelerate our performance in this 'lower for longer' environment.

"We need to reduce our cost base, improve production efficiency and have an organisation that best fits our combined portfolio and business plans."

Updating on the progress of its efficiency drive announced in 2015, Shell said it had finished cutting an initial 7,500 jobs and was "well under way" with plans to axe a further 2,800 roles following its tie-up with BG Group.

The move comes after it revealed earlier this month that it may close three offices, including the former BG Group headquarters at Thames Valley Park, Reading; BG's offices at Albyn Place, Aberdeen; and Shell's Brabazon House office in Manchester.

It also gave workers at the Thames Valley site the option of applying for voluntary redundancy, while a separate voluntary severance programme has been rolled out to ''some UK employees'' because the oil price remains persistently low.

Mr Goodfellow added: "These are tough times for our industry and we have to take further difficult decisions to ensure Shell remains competitive through the current, prolonged downturn.

"In 2016, the number of job reductions in response to low prices and as a result of the BG integration is expected to total at least 5,000 globally. This number includes the 2,800 integration-related roles previously announced."

Shell announced that first-quarter profits had plummeted 58% to 1.6 billion US dollars (£1.1 billion) at the beginning of this month, as the falling oil price continued to hammer the sector.

The company had a global workforce of about 90,000 people at the end of last year, while BG Group employed around 4,600.

The price of oil hit a seven-month high on Tuesday of 49.27 US dollars a barrel, but is still well below its peak in the summer of 2014 of about 115 US dollars a barrel.

Unite's John Boland said: "We have very real fears that Shell cannot continue to operate safely offshore if it keeps shedding the workers tasked with ensuring our oil industry is safe and sustainable.

"The Oil and Gas Confederation (OGC), of which we are members, has called time and again for an oil and gas sector summit to be convened urgently. So far the call has fallen on deaf ears but both the Scottish and Westminster governments must wake up to what is happening to this vital sector. They cannot stand by while a vital industry's demise takes place on their watch."

Unite warned that if the current rate of jobs attrition in the oil and gas sector continues, with 150 jobs going every day since the barrel price downturn, there will be no viable North Sea oil industry within a decade.

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