One component of the strategy to save expenses by up to $3 billion by the end of 2025 is the reduction of approximately one fifth of the personnel in two subdivisions.
As part of the latest decision made by the chief executive officer, Wael Sawan, to reduce expenses by up to $3 billion (£2.3 billion) by the end of the next year, Shell is currently in the process of laying off hundreds of employees from its oil and gas exploration unit.
Within two divisions of its oil and gas business that are responsible for exploring strategy and producing its oil and gas finds, the energy corporation has decided to reduce its personnel by approximately one fifth of its current workforce.
Reuters was the first news organisation to report on the changes, and it is believed that they will be subject to deliberation with personnel working in offices all over the world. However, it is anticipated that the offices located in Houston and The Hague will be hit the most, while its operations in the United Kingdom will be affected less.
“Shell aims to create more value with fewer emissions by focussing on performance, discipline, and simplification across the business,” a spokeswoman for the company said. “Shell’s goal is to create more value with less emissions.”
The announcement that was made at our capital markets day event in June 2023 was that we would be delivering structural operating cost reductions of between $2 billion and $3 billion by the end of 2025. In order to accomplish those savings, portfolio high-grading, new efficiencies, and an overall organisation that is significantly more efficient will be required.
As part of Shell’s oil and gas production sector, also known as upstream, which was responsible for more than a third of the company’s adjusted profits of $28 billion in the previous year, the operations that are being reduced are included in the upstream division.
In spite of the reductions, Shell anticipates that it will continue to increase its gas production over the next few years. This is in spite of the fact that climate experts have warned that new oil and gas projects are not compatible with the goal of reducing global warming to approximately 2 degrees Celsius above pre-industrial levels.
As part of the cost-cutting campaign that Sawan spearheaded immediately after he took over as CEO of the company, the corporation announced earlier this year that it intended to eliminate hundreds of jobs from its low-carbon solutions division.
Two employees of Shell wrote a rare open letter to Sawan, imploring him not to reduce investments in renewable energy due to the plans, which sparked outcry from climate activists as well as employees of Shell itself.
Since Sawan took over as chief executive officer of the conglomerate in January 2023, he has abandoned plans to reduce oil production and implemented a cost-cutting campaign in order to boost the earnings of the company.
The corporation, which recorded operating expenses of $40 billion in the previous year, has already reduced the number of employees in a number of departments, including its chemicals and wind division, as well as activities that are centralised, such as the legal and communications teams.
At the beginning of this month, Sawan stated that he had already achieved cost reductions totalling $1.7 billion across the entire firm and that he will continue to “simplify the way the organisation works.”
Shell’s market value has climbed by 13% over the course of the past year, reaching $170 billion.