As part of what it described as a major overhaul to shift to low-carbon energy, Royal Dutch Shell on Wednesday announced plans to cut up to 9,000 jobs, or over 10% of its workforce.
The Oil and gas giant, which had 83,000 employees at the end of 2019, said that the reorganisation will lead to additional annual savings of around $2 billion to $2.5 billion by 2022 beyond cost cuts of $3 to $4 billion announced earlier this year.
Shell’s London-traded shares were down over 1% in early trade.
Last month it launched a broad review of its business aimed at cutting costs as it prepares to restructure its operations as part of the shift to low-carbon energy.
Shell said it expected to cut 7,000 to 9,000 jobs by the end of 2022, including some 1,500 people who have agreed to take voluntary redundancy this year.
Rival BP this year announced plans to cut around 10,000 jobs as part of CEO Bernard Looney’s plans to rapidly expand its renewables business and reduce oil and gas production.
Reducing costs is vital for Shell’s plans to move into the power sector and renewables where margins are relatively low.
Competition is also likely to intensify with utilities and rival oil firms including BP and Total all battling for market share as economies around the world go green.
CEO Ben van Beurden said in an internal interview published on Shell’s website, “We have looked closely at how we are organised and we feel that, in many places, we have too many layers in the company,”.
The Anglo-Dutch company said in an operations update, also said its oil and gas production was set to drop sharply in the third quarter to around 3.05 million barrels of oil equivalent per day due to lower output as a result of the coronavirus pandemic and hurricanes that forced offshore platforms to shut down.