Shell To Cut Over 10,000 Jobs

The shares of Royal Dutch Shell popularly known simply as Shell rose as it confirmed that it would cut 10,000 jobs along with its announcement of a sharp decline in annual profits.

Oil prices have seen a steady decline over the years. Where before, a barrel of crude oil was on the upwards of $100 about 18 months ago, it is now $30.

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Royal Dutch Shell Plc, which is on the brink of completing what could be the oil industry’s largest deal in a decade; a $52 billion merger with exploration group BG, has been hit hard. It made $1.8bn (£1.23bn) for the fourth quarter of the year, compared with a $4.2bn profit for the same period the year before. Full-year 2015 earnings, excluding identified items, was $10.7bn, compared with $22.6 billion in 2014, their steepest fall in 13 years.


In 2015, the company cut back on investments and is pulling out of a project in Abu Dhabi as well as postponing decisions on work in Canada and Nigeria. The company is still however intent on going on with the merger with exploration group BG. It has said that the 10,000 jobs will go across the two companies as a result.

The deal has already been approved by shareholders and will be completed later this month. Mr van Beurden, the Chief Executive Officer of shell said: “The completion of the BG transaction, which we are expecting in a matter of weeks, marks the start of a new chapter in Shell, rejuvenating the company, and improving shareholder returns.” He also enthuses that “Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that.”

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The crude’s market collapse has caused a slash of earnings for almost all oil companies. Exxon Mobil Corp, BP Plc and others have been left floundering, attempting to strike a balance between investing for growth and making shareholder payouts.

BP has announced a profits slump of 51% to $5.9bn for 2015 and a further 3,000 job cuts earlier this week. Shell has however been able to keep up their dividend payouts to shareholders; even amidst considerations for this deal; a move that must have calmed a lot of its investors. Brendan Warn, a London-based analyst at BMO Capital Markets, speaking to BBC said; “BG now becomes important for Shell because it helps them grow and high-grade their assets,”