Royal Dutch Shell plans to cut up to 9,000 jobs as part of its transition plan as the company shifts to the low-carbon energy business.
Shell will lose over 10% of its workforce as the company moves from the oil and gas giant to low-carbon energy.
Shell had 83,000 employees at the end of last year. Its planned reorganization could give the company an annual savings of $2 billion to $2.5 billion by 2022.
Last month, the Anglo-Dutch company introduced a review of its business which aims to reduce costs as it gears up for restructuring its operations as part of the transition to low-carbon energy.
According to Shell, they could slash 7,000 to 9,000 jobs by the end of 2022, including some 1,500 people who are willing to take voluntary redundancy this year.
Rival BP will remove 10,000 jobs as part of CEO Bernard Looney’s objective to explore its renewables business and limit oil and gas production.
Shell’s plan to shift to the power sector and renewables, where margins are relatively low, revolves around reducing costs.
Competition with utilities and rival oil firms including BP and Total may expand as they fight for market share as economies are going green.
According to Shell, its oil and gas production may decline sharply in the third quarter to around 3,050 barrels of oil equivalent per day due to lesser output, which was caused by the coronavirus pandemic and hurricanes that made offshore platforms to close.
Shell reported a recovery in fuel sales in the third quarter from lows hit in the previous quarter as some countries recovered from lockdowns.
Other companies that cut jobs
Many other companies have announced their plans to cut jobs to cope with the effects of the coronavirus pandemic.
In May, Renault announced it would cut 14,600 jobs as the coronavirus crisis impacts the auto industry. The move is a part of a major overhaul to reduce business costs.
The company will also reduce its capacity, reducing the number of units it manufacturers each year from 4 million to 3.3 million by 2024.
It will also stop offering Renault-branded vehicles in China. According to the company, this plan will cost about €1.2 billion $1.3 billion to implement.
According to Renault, the changes are important because of the lack of activities in the global automotive market. The economic damage brought by the coronavirus pandemic as well as stricter emissions standards also contributed to their current situation.
HSBC previously announced that it would undergo restructuring due to the impact of the coronavirus crisis on its operations.
The pandemic made the planned overhaul more urgent. According to Noel Quinn, chief executive officer of HSBC, the company has to “lift the pause” on job losses and narrow its global headcount by 15% to 200,000 over the next three years.
“You will have seen that our profits fell in the first quarter, and virtually all economic forecasts point to challenging times ahead,” Quinn said in the letter.
“The reality is that the measures and the change we announced in February are even more necessary today. We could not pause the job losses indefinitely,” he wrote in the letter, which was reported by Reuters and shared with CNN Business.
