Shell Announces Layoffs, Aims for a Green Future

Global energy giant Shell released its third-quarter update on Wednesday, Sept. 30. Along with the business update on production during the quarter, the company also announced layoffs as it moves towards a greener future. How many job cuts are expected at Shell? 

Shell released its third-quarter update on Sept. 30. In the Integrated Gas segment, Shell expects production to between 820 thousand and 860 thousand barrels of oil equivalent in the quarter. The LNG liquefication volumes are expected to be between 7.9 million and 8.3 million tons. In the Upstream segment, Shell expects the production in the third quarter to be between 2,150 thousand and 2,250 thousand barrels of oil equivalent per day.

Shell also outlined job cuts during the quarterly update on Sept. 30. The company expects to cut between 7,000 and 9,000 jobs by the end of 2022. The job cuts include around 1,500 employees who have agreed to a voluntary reduction in 2020. Shell plans to lower its refining footprint to less than 10 sites. The company is reducing its complexity. Shell expects its cost-cutting measures to lead to annual sustainable cost savings between $2 billion and $2.5 billion by 2022.

Shell is focused on a green future and expects to be carbon neutral by 2050. In a separate interview on Sept. 30, Shell CEO Ben van Beurden talked about new business plans. He said that the company would “have to change the type of products that we sell.” He also said, “We will have some oil and gas in the mix of energy we sell by 2050, but it will be predominantly low-carbon electricity, low-carbon biofuels, it will be hydrogen and it will be all sorts of other solutions too.”  

Shell stock was trading 0.69 percent down at $24.49 in pre-market trading on Sept. 30. The stock has fallen 59 percent in 2020. Energy prices have tumbled due to the demand destruction caused by the COVID-19 pandemic. In April, Shell cut its dividend for the first time since World War II.

According to data compiled by MarketBeat, Shell has a 12-month target price of $59, which is a premium of 130 percent over the current prices. The company's highest target price is $70, while the lowest target price is $44. Oil prices need to recover for energy companies like Shell to rise.

According to a Reuters report, Marathon Petroleum, the largest refinery in the U.S., is also cutting jobs. While Marathon Petroleum didn't comment, a spokeswoman said the company is “communicating with our employees about measures we announced earlier this year to strengthen Marathon Petroleum for short-term and long-term success.”