Oil giant Royal Dutch Shell to cut 6,500 jobs

Oil giant Royal Dutch Shell to cut 6,500 jobs

PanARMENIAN.Net - Oil giant Royal Dutch Shell has announced it is to shed 6,500 jobs as part of cost-cutting plans, BBC News reports.

The company said the cost-cutting was to help "mitigate the impact" on profits amid a drop in oil prices. It said its "prudent approach" included reducing operating costs by $4bn and scaling back its oil exploration operations.

The firm announced profits of $3.4bn in the three months to 30 June, a 35% decrease compared with last year. Shell also said that it was "planning for a prolonged downturn" in oil prices.

The price of oil is currently about $52 a barrel, sharply down from about $110 a barrel a year ago.

Shell chief executive Ben van Beurden said: "We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery. We're taking a prudent approach, pulling on powerful financial levers to manage through this downturn, always making sure we have the capacity to pay attractive dividends for shareholders."

It also announced that it was selling a 33% stake in its Japanese business, Showa, to petrochemical group Idemitsu for about $1.4bn.

Capital investment would also be reduced by $7bn to about $30bn. This represented a 20% reduction from 2014, the company said, with sales of assets reaching $20bn for 2014-15.

"Today's oil price downturn could last for several years, and Shell's planning assumptions reflect today's market realities," Shell said. "The company has to be resilient in today's oil price environment, even though we see the potential for a return to a $70-$90 oil price band in the medium term."

In April, Shell announced that it was buying gas giant BG - the UK's third-largest energy company - for £47bn.

In its latest announcement of job losses, Shell said its deal with BG "should enhance our free cash flow" and be "a springboard to change Shell into a simpler and more profitable company".

Shell currently employs about 94,000 people.

It added that it planned to reduce costs further in 2016.

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