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Shell Cuts Jobs after Profits Plunge - ASHARQ AL-AWSAT English Archive
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LONDON (AFP) – Royal Dutch Shell plans to axe 1,000 more jobs and sell some of its assets owing to an “uncertain” outlook and after annual profits plunged, the British energy giant said Thursday.

But the group said it turned a profit in the fourth quarter in response to a major restructuring programme and a modest recovery in crude oil prices.

Fourth quarter net profit stood at 1.96 billion dollars after a heavy loss of 2.81 billion dollars in the same period in 2008 when the global downturn slashed worldwide energy demand.

For the year net profit tumbled 52 percent to 12.52 billion dollars (9.0 billion euros) compared with 26.28 billion dollars in 2008, Shell said in an earnings statement.

“For 2010, we are targeting a further underlying cost reduction of at least 1.0 billion dollars and a reduction of some 1,000 employees,” the group announced.

Shell said it had cut 5,000 jobs last year as part of a major restructuring that saved more than 2.0 billion dollars.

The group’s final quarter of 2009, while profitable, was nonetheless “impacted by the weak global economy,” Royal Dutch Shell Chief Executive Officer Peter Voser said in the earnings release.

“Oil prices have increased compared to a year ago but gas prices and refining margins have declined sharply because of weaker demand and high industry inventory levels.

“We are not assuming that there will be a quick recovery and the outlook for 2010 is uncertain,” he said.

Fierce rival BP on Tuesday said it too had returned to profit in the fourth quarter, with net earnings of 4.30 billion dollars thanks to higher oil prices and as it ramped up production and slashed costs.

Shell on Thursday said its adjusted net profit, which strips out exceptional items and changes to the value of its oil inventories, slumped 75 percent to 1.18 billion dollars in the fourth quarter.

Production slid two percent over the period to 3.33 million barrels of oil equivalent per day.

Voser said the group was positioning itself for “significant growth” in the years ahead.

“We are taking steps to improve our performance, to bridge the company, and our shareholders, into a period of significant growth in the coming years.”

Shell sold around 1.3 billion dollars of non-core downstream assets in 2009. Asset sales would continue this year, with 15 percent of its refining capacity placed under review.

BP recently overtook Royal Dutch Shell to become Europe’s biggest energy group by stock market value.

Separately on Thursday, Shell said it was investigating a claim from a Nigerian militant group that it had attacked a pipeline operated by the oil giant in the Niger Delta.

A previously unheard-of group calling itself the “Niger Delta Reenforcement Team” sent text messages on Thursday claiming to have blown up a major Shell Petroleum Development Company pipeline in the early hours of the morning.

“We are checking reports claiming an attack on a pipeline at Buguma and can not comment further at this time,” a Shell spokesman told AFP in Nigeria.

The message from the group also said it was distinct from the militant Movement for the Emancipation of the Niger Delta (MEND), which announced Saturday it was calling off a three-month-old truce with the government.

The global oil sector was boosted as oil prices had surged to a record 147 dollars a barrel in July 2008.

However, they subsequently plunged under 34 dollars in February 2009 as the global economic downturn hit demand for energy. Prices are currently trading at about 76 dollars per barrel.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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