Shell extends job cuts as CEO seeks to trim costs
(Bloomberg) — Shell Plc has begun cutting jobs beyond previously announced reductions in its low-carbon division as CEO Wael Sawan seeks to trim costs and be more competitive with U.S. rivals, people familiar with the matter said.
Roles are being eliminated on a division-by-division basis, with those affected offered options including redundancy packages or applying for jobs elsewhere in the company, according to the people, who asked not to be identified discussing non-public information. Shell declined to comment on the number of jobs involved. The company laid out a plan to investors in June to reduce “structural costs” by as much as $3 billion by the end of 2025.
“Achieving those reductions will require portfolio high grading, new efficiencies and a leaner overall organization,” Shell said in an email Thursday. “While no formal targets exist, we will continuously look to right-size the activities that deliver the most value.”
Sawan pledged to be “ruthless” in improving Shell’s performance after taking the CEO job earlier this year. The former divisional natural gas chief is making a concerted effort to close the stock’s valuation gap with U.S. rivals Exxon Mobil Corp. and Chevron Corp. by selling assets and reducing low-return investments, including some in clean energy.
Shell employed about 93,000 globally on a full and part-time basis at the end of 2022, more than double that of Chevron, despite the US company having a market value 34% higher. In October, Shell said 200 positions in its Low Carbon Solutions unit would be cut in 2024, about 15% of the total.
Big Oil executives are cautious about the future despite reaping record 2022 profits in the wake of the worldwide disruptions triggered by Russia’s invasion of Ukraine. Uncertainty over long-term fossil-fuel consumption and investor demands for dividends and stock buybacks are prompting Western oil explorers to be more disciplined with spending.
Chevron, which agreed to buy Hess Corp. in October, recently instructed staff to “do better” in 2024 after failing to deliver on some key performance metrics. Exxon has reduced headcount 17% since 2019 and earlier this month announced a plan to save $6 billion in structural costs by 2027.
