Shell signalled that job losses are likely as part of a wide-ranging redesign by the oil & gas supermajor to position it for the energy transition.

The 113-year-old oil and gas company has embarked on a programme to reshape its business, chief executive Ben van Beurden confirmed on Thursday.

Recharge carried a story in June on how Shell had started hatching plans for a massive company-wide restructuring in response to the Covid-19 pandemic and to position it for the shift to greener energy in the years ahead.

“In the second quarter, we started a programme in Shell to redesign and to restructure towards a fundamentally simpler, more effective organisation that can deliver the very best from our traditional businesses, grow our customer-centric businesses and rapidly and purposefully innovate for our future business models,” said Van Beurden.

"You will hear more about this in time. But I can tell you now that besides reshaping and redesigning, we will also resize as appropriate."

Design phase

Van Beurden said Shell was currently “going through the design phases" to see exactly what the new organisation will look like.

A clearer picture is set to emerge after the summer and by the time a strategy update takes place in February next year, he said.

Shell employs about 83,000 people around the world plus thousands more contingent workers.

Van Beurden did not say how many jobs are likely to go but he promised Shell in future will be a “simpler, leaner and more focused organisation”, which will “also cost much less”.

"We will end up probably with fewer people,” he said on a call with journalists to discuss second-quarter results.

In April, the company unveiled plans to become carbon neutral by 2050, promising more spending on renewables.

“In other words, from getting the resources out of the ground or out of the sky all the way to using the energy products in the customer base, there should be zero emissions associated with it on a net basis," he said.

“Predominantly it will mean shifting our product footprint to lower carbon energy products.

“And whenever we still sell carbon-based energy products, it will have to be in a supply chain that is net zero in aggregate.

Hard-to-beat ambition

“It's kind of hard to beat that as an ambition.”

The chief executive insisted the long-term fundamentals of Shell's business remain strong and that the world will still require oil and gas for many years to come in spite the need to cut carbon emissions.

"That is why, despite all the immediate action we have taken, we have not rushed to change our strategy. We have not rushed to change our cash allocation priorities. Our strategy is centred around our customers and it's centred around thriving in the energy transition to a lower-carbon future."

Van Beurden said any potential job cuts will not be driven solely by a need to reduce costs.

They will also position the company so it "can come out of the traps much better, much more nimble and equipped to execute our strategy”, he said.

“We have to reflect a more simplified way of working in organisational operating models," he said.

Shell has already started offering voluntary redundancies to some staff and reducing its numbers of expatriate workers, Van Beurden said.

Earlier on Thursday, Shell posted a loss of more than $18bn in the second quarter on write-downs of nearly $17bn in response to falling global demand due to the Covid-19 pandemic.

However, adjusted earnings in the quarter stayed positive, falling to $638m from $3.46bn in the same three months of 2019, helped by “very strong crude and oil products trading” and lower operating expenses, Shell said.

This article first appeared in Recharge's sister publication Upstream

Transition

Shell set for job cuts in energy transition 'redesign': CEO