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Royal Dutch Shell is to sack 6,500 staff this year and cut investments for the second time in the year to $30 billion.
The company, which is the biggest International Oil Company (IOC) in Nigeria in terms of assets and production volumes, said in a tweet yesterday that the moves were to deal with an extended period of lower oil prices and the challenging times facing the industry.
The sack of 6,500 members of staff, the company said, would be from a total of nearly 100, 000 employees all over the world.
“Challenging times for the industry, we are responding with urgency and determination and with a great sense of excitement for the future,” the company tweeted.
New Telegraph gathered that the company’s subsidiaries in Nigeria, Shell Petroleum Development Company (SPDC) and Shell Nigeria Petroleum Company (SNEPCo), have already begun to compile names of those to be sacked.
“Nigeria will, no doubt, share in this tough time and efforts to remedy it. The non-technical members of staff are majorly going to be affected by this gale of sack blowing everywhere here.
They are compiling names and truth is that everyone is jittery,” a management staff of the company, who craved not to be identified because he was not authorised to speak on the matter, said. Shell also yesterday announced in London the sale of a 33 per cent stake in the Showa Shell refinery in Japan to Idemitsu, for about $1.4 billion. The Anglo-Dutch company said it was planning more asset disposals, bringing total asset sales between 2014 and 2018 to $50 billion.
“We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery,” Chief Executive Officer, Ben van Beurden, said.
The company will also reduce 2015 capital investment for the second time this year to $30 billion by 20 per cent from a year ago. Big oil companies have cut 2015 spending by 10 to 15 per cent from 2014, to cope with a halving of oil prices over the past year to below $55 a barrel LCOc1.
Lower oil prices have contributed to a 37 per cent drop in the oil and gas group’s second-quarter profits. Rivals BP (BP.L) and Total announced further cuts this week. Shell said its operating costs were expected to fall by $4 billion, or around 10 per cent, in 2015 as part of a broad efficiency drive to boost its balance sheet.
It also expects $30 billion of asset sales between 2016 and 2018, on top of a total of $20 billion in disposals for 2014 and 2015 combined. Shell, however, has planned to return to the line of profit by pushing ahead with its proposed $70 billion acquisition of BG Group (BG.L). Shell hopes to complete its BG deal by 2016 and is still awaiting key regulatory approvals from the European Union, China and Australia.
But Brazil, the United States and South Korea have formally cleared it. The deal is expected to generate pre-tax benefits of around $2.5 billion per year, starting 2018. The tie-up will turn Shell into the world’s leading liquefied natural gas company and one of the largest deep-water oil producers, with a focus on Brazil. Shell maintained its quarterly dividend at 47 cents per share and is committed to rewarding shareholders with at least the same pay-out in 2016.