As dwindling oil prices take their toll on oil industry operations, Royal Dutch Shell has announced that it will sack 10,000 workers from its global staff strength this year.
It also announced in its fourth quarter of 2015 financial report that it would defer its final investment decision (FID) on the Bonga South-west deepwater project in Nigeria, saying that its operating costs and capital investments had been reduced by $12.5 billion with further reductions expected in 2016.
Shell’s Chief Executive Officer (CEO), Mr. Ben Van Beurden, made the announcement on the cost-cutting measures in a webcast presentation with analysts. A transcript of the presentation was released yesterday in Abuja.
“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.
“We are making substantial changes in the company, reorganising our upstream, and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices.
“As we have previously indicated, this will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies,” said Van Beurden.
He went on to state: “In 2015, we significantly curtailed spending by reducing the number of new investment decisions and designing lower-cost development solutions.”
In 2016, he said Shell had exited the Bab sour gas project in Abu Dhabi, and was postponing final investment decisions on LNG Canada and the Bonga South-west in deepwater Nigeria.
“Operating costs and capital investment have been reduced by a total of $12.5 billion as compared to 2014, and we expect further reductions in 2016,” he added.
Van Beurden explained that as a result of Shell’s actions in 2015, the company retained a strong balance sheet position, with 14 per cent gearing.
According to him: “Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that. Shell’s dividends for 2015 were $1.88 per share, and are expected to be at least $1.88 per share in 2016, as previously announced.” [myad]
