Paul Goodfellow, Shell’s Vice President for UK & Ireland, has said that despite the “tough message” he had to deliver yesterday to staff in Aberdeen, he saw green shoots of sustainable change emerging in the North Sea.
The 475 North Sea job cuts – part of a wider round of 2,200 across Shell’s global operations – comes after a 90 day review since Shell’s £36billion mega-merger with BG Group earlier in the year.
He said this most recent round of job losses was not just in response to “lower for longer” – the common industry view that oil will stay around $50 for the forseeable future – but “lower forever”.
“The fact that earlier this morning Brent nudged above $50 again makes no difference to our plans,” he said.
“We are building an organisation here that makes us competitive and sustainable in the lower forever world – not just the lower for longer world.
“If we can be resilient and competitive in a longer for longer, lower forever world, then clearly we will be competitive and resilient should and when price comes back.
“But we are not going to bet on that being the outcome.
“As many of us in the industry have said, even when oil was $110, the industry in the North Sea was not sustainable. Its cost base was way too high.”
He insisted that operators such as Shell are not just cutting jobs, and that efforts being made led by the Oil and Gas Authority (OGA) and trade body Oil and Gas UK (OGUK) were delivering “green shoots” of a sustainable industry, whatever the price of oil.
He pointed to the development the shared industry management system – the “Amazon of the North Sea” – which allows operators to share warehouses full of tools and kit.
“More and more people want to come into that,” he said.
“You can go online and order almost whatever standard equipment you need.
“The work that is going on in many of those fronts, they are trying to drive structural change into what we do.
“We are playing our part.”
He said Shell in particular has made good progress in terms of cutting its cost base.
“Last year our unit operating costs fell by 30% and the industry average fell by 25%.
“Our production efficiency went up by 6%, industry average went up by 5%
“Yes the people cost is an important part, but it is not the totality of what we are doing.”