30th Sep 2020 10:06
(Alliance News) - Royal Dutch Shell PLC on Wednesday said it plans to slash thousands of jobs as it looks to seal up to USD2.5 billion in annual cost savings by 2022 as the oil major grapples with tumbling demand.
The company said it expects third-quarter production in its Integrated Gas arm to be between 820,000 and 860,000 barrels of oil equivalent per day, at best a 10% annual decline.
In its Upstream operations, output is tipped to land between 2.15 million boepd and 2.25 million, with the segment hit by the hurricane season in the US. Hurricanes in the Gulf of Mexico hurt output by between 60,000 boepd and 70,000 boepd, Shell explained.
Upstream output came in at 2.61 million boepd in the third quarter of 2019, so Shell's forecast represents an annual fall of as much as 17%.
As in the second quarter, the Upstream unit is forecast to make a loss.
Oil products sales of between 4 million and 5 million barrels of oil per day are forecast, which would at best be a 26% annual decline.
Chemical sales volumes are expected to fare better, forecast between 3.70 million tonnes and 4.00 million tonnes, so anywhere between a 3.8% annual fall and a 4.0% hike.
In addition, the oil major expects earnings to be hit by a post-tax impairment charge in the range of USD1.0 billion to USD1.5 billion for the third quarter.
Oil companies have struggled so far in 2020 as the Covid-19 pandemic has crippled demand for energy and infighting between producers has gotten in the way of reductions in output, sending spot prices lower.
Shell said it expects to cut 7,000 to 9,000 jobs by the end of 2022 following the plunge in demand. The "reduced organisational complexity" and other measures, Shell said, are expected to deliver sustainable annual cost savings of between USD2.0 to USD2.5 billion by 2022.
The figure includes roughly 1,500 who have agreed a voluntary redundancy this year, Shell added.
Shell's A shares were 0.8% higher at 992.00 pence each in London on Wednesday morning. The company's B shares were up 0.6% to 962.00p.
By Eric Cunha; [email protected]
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