Shell to cut 6500 jobs this year

“The company has to be resilient in today’s oil price environment”.

Anglo Dutch offshore oil and gas major, Royal Dutch Shell, has announced that it will be cutting a further 6,500 jobs.

Some believe Shell’s announcements on Thursday indicate a new sales pitch for its BG deal, viewed as a symbol of the company’s comparatively bullish stance on the oil market.

Shell will retain a 1.80 per cent holding in the company. It has a strong global presence. This geographical diversity of Shell partially insulates it from operational and financial risks arising from regional regulatory and geopolitical uncertainties.

In its quarterly statement, Shell said both sides were planning for what it said was a “world class integration” of two industry leaders.

The price of oil is now about $53 a barrel, sharply down from about $110 a barrel a year ago.

Shell’s second-quarter cost of supplies earnings, as excluding identified items, earnings fell from $6.1billion a year earlier to $3.8billion. He added that prices will stay “lower for longer”.

In a related streamlining effort, Shell announced plans to sell 33.24% of its stake in Japanese refiner Showa Shell Kekiyu KK to Idemitsu JPY 169 billion (approximately US$1.4 billion).

“We have a very significant position in the North Sea that ranges from very mature assets to assets that are still under construction”.

Looking into the future, Shell is betting on offshore oil fields in Alaska, which van Beurden described as having the potential to produce more energy than the biggest projects in the Gulf of Mexico.

British Gas’ operating profit was up by 44%, according to interim first half results from the group, which was larger than expected.

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”.

Like rivals BP, Statoil, and Total, it announced reductions in capital investments for a second time this year, shaving another $3bn off its 2015 budget to bring it to $30bn. Recent downstream divestments completed by Shell include refinery sales in the United Kingdom, France, Germany, Norway, and Czech Republic. However, the stock for Shell (NYSE:RDS.A) went down by 17.25% for the current year. We expect to see a similar performance during the second quarter. The income from trading operations depends largely on the level of volatility in commodity prices.