Massive Job Loss Looms, As Shell Plans Slashing 6,500 Jobs

Royal Dutch Shell has said that it would cut 6,500 jobs as it braces for up to several years of low oil prices.

The company said in its second quarter results that it expects to cut about 6,500 staff and direct contractor positions in 2015, but did not disclosed how those cuts will be distributed.

Shell also slashed its 2015 capital investment budget down to $30 billion, a $3 billion reduction since the company’s last update in April and about $7 billion less than 2014 spending levels.

The company said the reduced spend reflects cost reductions, project cancellations and a re-phasing of growth options.

Shell added that the cost cutting plans are necessary because current low oil prices could “last several years.”

“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,” Shell added.

Shell expects operating costs to fall by over $4 billion in 2015 and said it plans to reduce costs further in 2016.

The company noted that its second quarter upstream earnings climbed to $1.037 billion, up from $675 million last quarter but still down from $4.722 billion booked in the second quarter of 2014, adding that downstream profits surged to $2.961 billion, up from $2.646 billion last quarter and $1.347 billion during the same quarter last year.

The company said it would pay a second quarter 2015 dividend of $0.47 per ordinary share and $0.94 per American Depositary Share.

Shell said it expects asset sales to total $20 billion for 2014 and 2015 combined, despite weak market conditions.

Shell CEO, Ben van Beurden, said the regulatory filings process and integration planning for its combination with BG Group are “both progressing well.”

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