Energy giant Royal Dutch Shell said that it will layoff as much as 9,000 employees, accounting for about 10 percent of its employees. The decision comes amid the depressed demand for fossil fuels during the pandemic.
Shell announced that it will axe between 7,000 to 9,000 jobs until the end of 2022. Moreover, it will include 1,500 who have volunteered to exit the company. However, the company did not indicate where the layoffs would particularly occur.
The company said it would cut between 7,000 and 9,000 positions by the end of 2022, potentially affecting more than 10% of its workforce https://t.co/0IppfWvppv
— CNN Business (@CNNBusiness) September 30, 2020
Reducing the workforce serves as a part of Shell’s efforts to reduce costs while it transitions into cleaner fuel. Also, the oil giant has struggled as the coronavirus hampered the demand for fossil fuels. According to its CEO Ben van Beurden, the decision is necessary “for the future of the company.”
Meanwhile, the petroleum company’s expected savings per year could amount to $2.5 billion in the coming years. “We have to be a simpler, more streamlined, more competitive organization that is more nimble and able to respond to customers,” van Beurden stated.
He added that the decision is “an extremely tough process” for the company. The chief executive noted that letting go of people is “painful.”
Part of the job cuts would serve as a simplification of the company’s structure, the chief executive noted. “We have looked closely at how we are organized, and we feel that, in many places, we have too many layers in the company: too many levels between me, as the CEO, and the operators and technicians at our locations.”
Similarly, Shell’s competition in the energy business, BP also said it will layoff about 10,000 of its 70,000 employees worldwide. It comes as the company also intends to focus on alternative energy sources.
Shell’s Green Pledge
Amid the coronavirus health crisis, demand for oil had dropped. CNN Business even notes that some analysts said the oil demand may not again achieve the 2019 levels. But in the third quarter, Shell said that its fuel sales had recovered. Meanwhile, other companies decided to move forward with renewable and cleaner energy sources.
Shell also wants to enter the low-carbon market and said it aims to achieve decarbonization by 2050. Although the company will continue the production of oil and gas by mid-century, predominantly, it will have to focus on low-carbon electricity, low-carbon fuels, and hydrogen at that time.
Furthermore, the chief executive added that Shell’s goal of decarbonization has to apply to all their operations. It means “major changes at refineries, chemical sites, on-shore and offshore production facilities.”