Shell cuts 6,500 jobs predicting decline in oil price

Baku. 30 July. REPORT.AZ/ Royal Dutch Shell is cutting 6,500 jobs in Nigeria and at the rest of its global operations and will reduce capital spending by 20 per cent this year, as the oil company takes dramatic action in response to the plunge in oil prices, Report informs citing foreign media.

The Anglo-Dutch group announced on Thursday its investment this year would decline $7bn from last year’s levels to about $30bn, a bigger drop than forecast just three months ago, as it axed and postponed new projects.

It expected to make further reductions to operating costs in 2016 after a 10 per cent fall this year.

The action comes amid savage cost-cutting and industry-wide moves to push back billions of dollars of spending on new projects following the collapse in crude prices over the last year. Some $200bn of spending on major oil and gas projects has now been deferred since the crude price began falling, a decline that accelerated when Opec opted not to cut output in the face of soaring US prodiction.

Shell reported a 37 per cent fall in second-quarter earnings to $3.8bn on a current cost of supplies basis excluding identified items - a measure of profits preferred by analysts. This compared with $6.1bn in the same quarter last year and beat analysts’ expectations.

The company pointed to improved refining margins and a strong downstream result, where profits more than doubled from $1.3bn to $3bn, that offset the impact of sharply lower crude prices - down now to $53 a barrel from last summer’s peak of $115.

Profits from exploration and production fell 78 per cent to $1bn and its Americas arm suffered a loss. Output declined 11 per cent to 2.7m barrels of oil equivalent a day from year ago levels.

In a statement updating investors on its proposed £55bn takeover of rival BG Group, Shell said that the deal was “on track” and the combined group would be reshaped on completion.