Royal Dutch Shell is set to trim up to 10% of its workforce, totaling 9,000 jobs in a massive turnout due to its transition to low-carbon energy.
The Anglo-Dutch-based company announced that its employee downsizing would leave between 7,000 and 9,000 positions vacant before 2023. A large portion of the job cut includes those who volunteered to end their ties with the company this year, amounting to 1,500 people.
Shell said the massive organization overhaul would lead to $2.5 billion in savings by 2022, a 25% target increase from their annual $2 billion records.
“We have to be a simpler, more streamlined, more competitive organization that is more nimble and able to respond to customers. Make no mistake: this is an extremely tough process. It is very painful to know that you will end up saying goodbye to quite a few good people.”
CEO Ben van Beurden
The move marks the struggles Big Oil continues to face as the coronavirus continues to impact most trades globally. Some industry experts believe that the era of demand growth is nearing an end, with most oil companies cutting the workforce and slashing dividends.
In August, Shell launched a broad review of its operations as the business perspective pointed to cutting expenses with the plotted reorganization and shifting to low-carbon energy. Reducing cost is a critical key for the company’s transition period moving to the power sector.
With the turn of events, experts expect the competition in the market to aggravate owing to rival oil companies’ effort to slug it all out for the market share, especially businesses intended to be more environment-friendly.
The massive decline of demand for gas and oil due to the current health crisis has urged Europe’s large oil manufacturers to speed up their move to a greener cause.
Shell already bared its objectives to achieve net-zero carbon emissions in 30 years. Van Beurden was quick to clarify on Wednesday that it doesn’t mean Shell wouldn’t produce oil and gas by that date. However, he added that they’re more likely to offer hydrogen, low-carbon electricity, and low-carbon biofuels.
“We have to be net-zero in all our operations, which means major changes at refineries, chemicals sites, on-shore, and offshore production facilities. But it also means that we have to change the type of products that we sell.”
Ben van Beurden
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