Royal Dutch Shell is cutting 6,500 jobs in Nigeria and at the rest of its global operations and will reduce capital spending by 20 per cent this year, as the oil company takes dramatic action in response to the plunge in oil prices.
The Anglo-Dutch group announced on Thursday its investment this year would decline $7bn from last year’s levels to about $30bn, a bigger drop than forecast just three months ago, as it axed and postponed new projects. It expected to make further reductions to operating costs in 2016 after a 10 per cent fall this year the Financial Times reports.
The company pointed to improved refining margins and a strong downstream result, where profits more than doubled from $1.3bn to $3bn, that offset the impact of sharply lower crude prices — down now to $53 a barrel from last summer’s peak of $115.
Shell said it anticipated a 6,500 reduction in staff and contractor job numbers in 2015 and forecast capital investment to be about $30bn, or $3bn less than it expected in April. The “pro-forma” budget for the enlarged group would be $35bn next year, less than projected previously.
This reflected “cost reductions, project cancellations and re-phasing of growth options”. It follows similar moves by other “supermajors” as they grapple with an industry downturn some have likened to the slump of 1986.
Shell said it would continue to “review both the ongoing projects under construction, and the medium term investment options, to balance returns, affordability and medium term growth potential.”
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