European energy major Royal Dutch Shell became the latest victim of the oil market mayhem when it reported its lowest annual income in more than a decade and said it would take fresh steps to cut costs – including shedding jobs – if required.
The company said in a statement that its 2015 income fell 87 percent to $1.94 billion, as it joined a growing list of the world’s largest oil and gas companies such as Exxon, BP, Norway’s Statoil and Chevron reporting sharp falls in profits as they battle a weak market.
“We are making substantial changes in the company, reorganising our Upstream, and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices. As we have previously indicated, this will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies,” Chief Executive Ben van Beurden said in a statement.
Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that, he added.
“In 2015, we significantly curtailed spending by reducing the number of new investment decisions and designing lower-cost development solutions,” he said, adding that Shell had exited the Bab sour gas project in Abu Dhabi and was postponing final investment decisions on LNG Canada and Bonga South West in deep water Nigeria.
“Operating costs and capital investment have been reduced by a total of $12.5 billion as compared to 2014, and we expect further reductions in 2016,” van Beurden said.
The Shell-BG merger is expected to go through soon and the chief executive said the deal would transform the company.
“The completion of the BG transaction, which we are expecting in a matter of weeks, marks the start of a new chapter in Shell, rejuvenating the company, and improving shareholder returns,” van Beurden said.