Two oil giants, Chevron and Royal Dutch Shell, have unveiled plans to top the sack of employees globally, including those in their services in Nigeria to 18,500 in 2016. Shell revealed its plans to sack 10,000 staff and slash direct contractor positions in the company’s unedited full year 2015 results obtained by New Telegraph yesterday.
The oil giant also added that there are plans, subject to approval by shareholders at a January 27 meeting in the Hague, Netherlands, of a cost cutting strategy by $3 billion in 2016. Chevron would, in the process that began in 2015, complete the sacking of 8,500 staff in its services globally by the end of 2016.
The United States oil company revealed it would lay off 7,000 staff before 2016 ends in addition to the 1,500 it announced early in 2015, according to a 2015 last quarter report published by New York Times. Stating that it expected its costs to fall again in 2016, by a further $3 billion, Shell, which slashed $4 billion investments in 2015, said that its drive to improve competitive performance was delivering at the bottom line.
“Operating costs have reduced by $4 billion or around 10 per cent in 2015, and the company expects Shell’s costs to fall again in 2016 by a further $3 billion. Synergies from the BG combination will be in addition to that. “Together, these actions will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies, as streamlining and integration of the two companies continue,” the Shell report stated. Chief Executive Officer of the Royal Dutch Shell, Ben van Beurden, who confirmed the new business strategy, expressed satisfaction with “the momentum in the company to reduce costs and to improve competitiveness.” Beurden noted that bold, strategic moves shape the industry.
“A substantial number of staff in the operations of Shell and Chevron in Nigeria will be swept by this gale of sack,” an industry source once told New Telegraph, adding that Shell and Chevron were “courageous enough to announce the number of staff to be affected, but the truth is that all the international oil companies (IOCs) are toeing the line of downsizing and they have all begun this with the termination of contracts with some of their contract staff.”
The two multi-nationals did not give a breakdown of how many staff in their Nigerian operations would be affected, Chevron, however, said on its website that Nigeria was “an important part of Chevron’s business globally,” while Shell, which is also the biggest oil firm in Nigeria in terms of assets and production, “produces substantial volume of its global output from Nigeria.” Shell, according to the unedited report published on January 20, is taking impactful steps to refocus and reduce capital spending.
“Shell’s capital investment in 2015 is expected to be $29 billion, an $8 billion or over 20 per cent reduction from 2014 levels. This has been delivered by efficiency improvements and more selectivity on new investments. “Capital investment for Shell and BG combined in 2016 is currently expected to be $33 billion, around a 45 per cent reduction from combined spending, which peaked in 2013,” the report read, adding that flexibility for “further reductions is available and will be utilised should conditions warrant that.
“As a result of the above actions, we have retained a strong balance sheet position at around 14 per cent gearing. Asset sales for 2014 and 2015 now exceed $20 billion, well above the original plan of $15 billion set out in early 2014. Preparations are well advanced for $30 billion of asset sales in 2016-18, assuming the successful completion of the combination.”
Shell’s fourth quarter and full year 2015 results and fourth quarter 2015 dividend are scheduled to be announced on February 4. A Shell General Meeting in relation to the proposed combination is scheduled for January 27, 2016 in The Hague, The Netherlands.
The financial information in the announcement, the company however declared, “is preliminary and subject to further internal and external review before the publication of Shell’s fourth quarter 2015 and full year 2015 figures.”
By Adeola Yusuf from New Telegraphonline