Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Shell is planning to cut a fifth of its workforce in two oil and gas exploration divisions, as a cost-cutting drive by chief executive Wael Sawan reaches its core upstream business.
Around 20 per cent of jobs will go in units responsible for Shell’s exploration strategy and for developing its oil and gas finds, according to a person familiar with the plans.
“These are the technical professionals who originate and mature oil and gas opportunities,” the person said, pointing to Shell’s geologists, geophysicists, and oil and gas well designers.
The person added that some of the cuts would come as technical departments from different arms of Shell were combined, and that the plans were currently being negotiated with employees and are not final.
The news of the job cuts was first reported by Reuters.
Sawan promised shortly after he took charge of the oil major last year to trim Shell’s operating expenses by up to $3bn by the end of 2025. The group had $40bn of operating expenses in 2023.
Since then, he has cut jobs across Shell, including in its renewable energy businesses. At the beginning of August, Sawan said he had so far made $1.7bn of cost savings, and would continue to “simplify the way the organisation works”.
He promised to continue to merge management roles and replace back-office staff with technology but did not mention the core oil and gas business.
Shell has argued that exploration is vital to replenish resources as they are depleted, and to discover profitable new fields.
“What we do not know is whether these cuts are because they are overstaffed by 20 per cent or whether it implies a potential reduction in the portfolio itself,” said Irene Himona, an analyst at Bernstein.
She added that Shell’s upstream production costs were above its peer-group average. “I guess it is a view that they need to improve efficiency,” she said.
Shell’s share price has risen by more than 8 per cent so far this year — outperforming its rivals — as investors have warmed to Sawan’s focus on Shell’s operations and on the consistency of the company’s returns to shareholders.