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Top oil producer Royal Dutch Shell has hinted at cutting jobs from roughly 7,000 to 9,000 to save up to $ 2.5 billion by 2022.
CEO Ben van Beurden revealed this in an interview on Wednesday, September 30, 2020, saying the measure is expected to deliver sustainable annual cost savings of between $ 2 and $ 2.5 billion by 2022.
This will partially contribute to the announced reduction of the underlying operating cost from $ 3 to $ 4 billion for the first quarter of 2021.
According to Shell, aside from the plan to cut jobs from 7,000 to 9,000, around 1,500 people agreed to take the voluntary layoff this year before the layoff that is expected to occur in 2022.
Upstream
In the upstream sector, Shell said it expects production to be between 2,150 and 2,250 thousand barrels of oil equivalent per day, which includes a production impact of 60 to 70 thousand barrels of oil equivalent per day from the hurricanes in the Gulf of Mexico from the United States.
In its report for the third quarter of 2020, it stated that Shell posted liquid prices in the first two months of the quarter, reflecting a 15 to 20 percent discount to Brent, similar to the second quarter 2020 discount.
It revealed that realized gas prices are in line with Henry Hub. Depreciation is expected to be at a level similar to that of the second quarter of 2020.
Integrated gas
In the gas area, Shell said it expects production to be between 820 and 860 thousand barrels of oil equivalent per day and LNG liquefaction volumes are expected to be between 7.9 and 8.3 million tons.
Trading and optimization results are expected to be below average.
A one-time tax charge is expected to negatively impact adjusted earnings in the range of $ 100 to $ 200 million; no cash impact is expected in the third quarter.
About 80 percent of Shell’s forward sales of LNG in 2020 have been linked to the price of oil with a price gap of up to 6 months. Consequently, lower realized prices due to this price mismatch are expected to have a significant impact on LNG margins in the third quarter.
Shell said cash flow from operations (CFFO) may be impacted by gains made from forward commodity movements as it curves up through the last day of the quarter.
