Shell has announced plans for between 7,000 – 9,000 job cuts from its global workforce by the end of 2022.
The energy giant, which has been grappling with the effects of the oil price downturn and Covid-19, follows rival BP who earlier this year announced plans for 10,000 job cuts.
Shell, which employs 6,000 people in the UK, including 1,000 directly in its Upstream oil and gas business in the country, said the “reduced organisational complexity” will save between $2billion – $2.5billion by 2022 on an annual basis.
The figure will include 1,500 who have agreed to take voluntary redundancy by the end of this year.
Shell declined to say how many UK jobs will be cut and Aberdeen South MP Stephen Flynn said the uncertainty is “deeply regrettable“.
It comes after UK country manager Sinead Lynch said earlier this year the company had to “look long and hard” at its choices.
Job cuts of 9,000 would represent a roughly 10.5% reduction of the Shell global workforce of 86,000.
CEO Ben van Beurden described it as an “extremely tough process” but “reducing cost is essential”.
He referred to bringing technical support staff for its global assets “all into one place”, and there being “too many people in the middle” of the organisation in terms of management “layers”.
Mr van Beurden added: “In some cases there are good reasons for that, but as a principle we are looking to remove that complexity, and cost, so we can be the nimble, efficient and customer-focused company we need to be.”
Middle management was one of the factors BP tackled in its plans to cut jobs earlier this year.
Oil majors have been rocked by the dual shock of Covid and the oil price crash. In July, Shell announced an $18billion loss in the second quarter of the year due the impact on its business.
The job cut figure has been released in an update ahead of its third quarter results.
In its update, Shell said it expected adjusted earning losses for its Integrated Gas and Upstream segments, while the Oil Products and Chemicals divisions will be $200-400m and $100m worse off respectively compared to Q2.
Post-tax impairment charges of between $1billion to $1.5 billion are also expected for the third quarter, Shell said.
Following news earlier this year that BP plans to cut 10,000 jobs, Rystad Energy predicted all oil majors would be seeking to cut roughly 15% of their workforces in response to the current crisis.
The last time Shell made large job cuts in the UK was in 2016, when it cut 475 workers as part of a global reduction of 2,200 – a smaller proportion than the figure proposed between now and 2022.