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Shell to cut 9,000 jobs globally due to oil price crash as it shifts to clean energy

The Royal Dutch Shell Plc has revealed plans to cut thousands of jobs globally, including in Nigeria.

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Royal Dutch Shell Plc

Anglo-Dutch giant, Royal Dutch Shell Plc, has concluded plans to cut as much as 9,000 jobs globally, including Nigeria, as part of its cost-cutting measure due to the crude oil crash and the oil firm’s move to overhaul its business to embrace clean energy.

The oil and gas giant, which employed 83,000 workers at the end of last year, expects to save up to $2.5bn annually from the cost-cutting plan that includes shedding between 7,000 and 9,000 employees before the end of 2022. This represents as much as 11% of the workforce that includes about 1,500 people taking voluntary redundancy this year.

The global staff-cut comes as Europe’s largest oil company prepares to invest more in a low-carbon energy future while battling the market fallout of the coronavirus pandemic, which has slashed demand for oil.

READ: NNPC signs gas development and commercialization deal with SEEPCO

The Chief Executive Officer of Shell, Ben van Beurden, in a statement said, “We have to be a simpler, more streamlined, more competitive organization. In many places, we have too many layers in the company: too many levels between me, as the CEO, and the operators and technicians at our locations.”

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The Shell boss admitted that although this is an extremely tough process as it is painful knowing some staff have to go, however, they are doing this because they have to and it is the right thing to do for the future of the company.

According to its statement, Shell plans to refocus its refining business, eventually cutting its number of plants to fewer than 10, from the present 15. Refining margins have been much lower this quarter than last quarter, and oil-product sales have shrunk to around 4 million to 5 million barrels a day from 6.7 million a year earlier.

READ: Shell warns investors it may write down up to $22 billion due to oil crash

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While the Anglo-Dutch major didn’t provide a full breakdown of the job losses and plans to save $2.5 billion, a spokesperson said that positions in the top three layers of the company would be reduced by one fifth.

The Shell boss disclosed that layers of management would be cut as they have looked closely at how they are organized and feel that, in many places, there are too many layers in the company. He said that there are many levels between himself, as the CEO, and the operators and technicians at our locations.

He also pointed out that other savings are likely to come from trends that have emerged during the coronavirus pandemic; including virtual working, less travel and a lower reliance on contractors.

READ: Nigeria faces prolonged exchange rate crisis as oil prices remain stuck at $40

The company said that the third quarter oil-product trading results is expected to fall short of the historical average and will be significantly lower than in the second quarter. That shows the trading bonanza that saved Shell’s last set of results won’t be repeated. Its full third-quarter financials, scheduled for Oct. 29, will include impairment charges of $1 billion to $1.5 billion.

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Shell’s B shares traded down 1.7% at 940.2 pence as of 4:36 p.m. local time.

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Barclays Plc analyst, Lydia Rainforth wrote on a research note, “The transformation to a leaner and lower-carbon organization is the right one for Shell longer-term. But with the macro environment still challenging, this may take some time to reflect in the share price.”

READ: Fidelity Bank to raise N50 billion in bonds in Q4 to refinance existing debts

The crash in oil prices which was triggered by the coronavirus pandemic has seen Shell’s peers also take drastic steps to shore up the balance sheet. BP Plc said in June it planned to cut 10,000 jobs, Chevron Corp. intends to trim 10% to 15% of its global workforce, while Exxon Mobil Corp. is reviewing staffing country by country.

Shell began the process in May when Van Beurden told staff in a memo that it was reshaping the company to make it slimmer and more resilient and that there could be redundancies in the second half of the year, according to people with knowledge of the matter.

READ: UK court dismisses $1.1billion Nigerian corruption lawsuit against Shell, Eni

Green Energy

The reorganization and cost-cutting measure are also designed to further Shell’s expanded green ambitions. The company said in April it planned to eliminate all net emissions from its own operations and the bulk of greenhouse gases from the fuel it sells to its customers by 2050. Shell also said that ultimately, it would only do business with emission-free companies.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

1 Comment

1 Comment

  1. ABIMBOLA

    October 1, 2020 at 12:51 pm

    Please stop giving us fake news ,Shell in Nigeria do not have 9000 staff to cut but the news was Shell will be cutting 9000 job globally not only Nigeria.

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Energy

Togo, Niger, Benin remit N2.04 billion to Nigeria for power supply

Nigerian Electricity Regulatory Commission says international electricity customers remitted the sum of N2.04billion to Nigeria in three months.

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Togo, Niger, Benin remit N2.04 billion to Nigeria for power supply, NERC postpones increase of electricity tariffs

Nigeria’s international electricity customers – Togo, Niger, and Benin, remitted the sum of N2.04billion in the first quarter of 2020, as their outstanding electricity bill to the Market Operator (MO) of the sector in Nigeria.

This was found in the Nigerian Electricity Regulatory Commission 2020 first quarter report, which was released recently.

READ: FG to inject over N198 billion on capital projects in power sector in 2021

According to the report, a total of N4.05billion ($13.22million) invoices were issued by the MO to international customers including Societe Nigerienne d’electricite or NIGELEC; Societe Beninoise d’Energie Electrique (SBEE); and Compagnie Energie Electrique du Togo (CEET).

The commission stated that during the quarter, NIGELEC made a payment of ₦1.61billion ($5.27million) as part of its outstanding bills for the energy received from NBET and services rendered by the MO.

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READ: Nigeria to fix irregular power supply in 40 years- Senate

Explore Data on the Nairametrics Research Website

It stated, “Similarly, SBEE paid ₦0.43billion ($1.39million) in respect of services received from MO.

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“It was noteworthy that tariff shortfall (represented by the difference between actual end-user tariffs payable by consumers and the cost-reflective rates approved by NERC) had partly contributed to liquidity challenges being experienced in the industry.

“The settlement ratio to the expected Minimum Remittance Thresholds, having adjusted for tariff shortfall, indicated that power distribution companies needed to improve on their performance.”

READ: Shell to cut 9,000 jobs globally due to oil price crash as it shifts to clean energy

But

Special customers like Ajaokuta Steel Co. Ltd and others in its environs did not make any payment in respect of the N0.27billion and N0.05billion invoices issued to them by the Nigerian Bulk Electricity Trading Plc and the MO respectively, during the period under view.

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Meanwhile, the power distributors failed to remit N119.88billion to the sector within the same period.

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READ: FG set to create at least 5 million jobs for youths in the power sector – Minister of Power 

Whereas Discos were expected to make a market remittance of 46.09% during 2020/Q1, only 32.53% settlement rate was achieved within the timeframe provided for market settlement in the Market Rules,” it added.

What it means: The Discos’ remittance level, regardless of the prevailing tariff shortfall, was still below the expected MRT and they are expected to improve on their performances.

READ: Apapa Command’s revenue rises 10.59% to N227.3 billion in the first half of 2020 – Customs 

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Energy

Nigeria to fix irregular power supply in 40 years- Senate

40 years is needed due to underfunding and the FG’s failure to fix the challenges of electricity generation.

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Nigeria to fix irregular power supply in 40 years- Senate, Customers to pay for metering through cost of tariff- NERC

The Nigerian Senate has said that it will take Nigeria 40 years to fix irregular power supply.

This was disclosed by the Senate Committee on Power on Tuesday after the Minister of Power and his team made a presentation to the Committee, according to Guardian.

READ: N2trillion Mambila project: FG starts disbursement of compensation funds

The four decades wait, according to the lawmakers, is due to underfunding and the Federal Government’s failure to fix the challenges of electricity generation.

The committee was astonished by the submission of the Minister of Power, Mamman Saleh, that of the N165billion required for capital projects in 2020, N4billion was given as bribe of which only N3billion was cash-backed.

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READ: FG guarantees mortgage loan to low income buyers at low interest rate

In lieu of this, the Committee dismissed claims made by the minister over raising hope on early provision of constant power supply, while Managing Director of the Transmission Company of Nigeria (TCN), Sule Ahmed Abdulaziz, painted a gloomy picture during the ministry’s budget defense.

A member of the Committee, Danjuma Goje, expressed concern that based on Abdulaziz’s presentation, N165billion was proposed, but the ministry gave N4billion in envelope, insisting that it would take 41 years to deliver constant electricity when N165billion is divided by N4billion.

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Backstory

Recall that Nairametrics had earlier reported that it will take nothing less than $100 billion to enable stable power supply in Nigeria.

READ: Bitcoin Whale transfers $1.1 billion worth of crypto for $3.58

What they are saying

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Mr. Danjuma expressed pessimism over hopes of stable power supply in the country. He went as far as stressing that even if ongoing projects are being completed there is still no hope for stable transmission of power in the country.

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Mr. Danjuma was quoted as saying: “Going by the minister’s presentation that transmission gas increased from 5000 to 8000 megawatts, it is not enough. When dishing out figures, we should bear in mind that capacity, transmission, and distribution have increased and that Nigerians, manufacturers, and industrialists want to see stable electricity.

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Energy

FG set to create at least 5 million jobs for youths in the power sector – Minister of Power 

FG is set to create at least 5 million jobs for the youths, through its 5 million solar power initiative and other projects.  

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FG set to create at least 5 million jobs for youths in the power sector – Minister of Power , Consortium of Western investors to inject upwards of $5 billion in Nigeria's renewable energy sector, Power: Nigeria's deal with Siemens - the birth of a new era?

The Minister of Power has disclosed that the Federal Government of Nigeria is set to create at least 5 million jobs for the youths, through its 5 million solar power initiative and other projects.  

This was disclosed by Engr. Sale Mamman, The Minister of Power, during a stakeholder meeting in Jalingo, the Taraba state capital, where he addressed youths on the need to foster peace and harmony. 

READ: FG discloses how the problem of the power sector was created

READ: #EndSARS: FG creates new N25 billion Youth Fund, to increase to N75 billion in 3 years

Mamman, stated that in line with the demands of the youths, the Federal Government is set to create massive job opportunities for Nigerian youths in the power sector through its 5 million solar power initiative. 

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This initiative includes the five million Solar Home System (SHS) project, the Mass Metering Scheme, among others. 

The minister lauded the youths for making their voices heard on developmental issues, He urged the youths to shun violent protest while giving the President a chance to implement their demands and other ongoing robust projects on youth empowerment. 

READ: How Geregu Power became one of the best performing power plants in Nigeria – Akin Akinfemiwa

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What they are saying 

Speaking on the initiative to immerse 5 million Nigerian youths into the power sector, the minister said: 

“Plans are ongoing to kick start this and it is being designed to ensure that majority of the firms and the installers are Nigerian youths. This is also part of the commitment of President Muhammadu Buhari’s focus on lifting 100 million people out of poverty within 10 years. 

READ: Toyota begins solar testing for electric cars as market competition heats up

“From the briefings I have received so far, the youths are taking up opportunities in this aspect as well as in renewable energy. This is another way the government will be empowering young Nigerians as the local assembly; installation and the maintenance of these meters are largely handled by our industrious youths.” 

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“The minister urged the youths to vigilant and resist and attempt by some people to use them to incite violence for their sinister motive, noting that the Federal Government was tailoring more programmes for the youths through the Siemens Presidential Power Initiative and in building capacity on renewable energy.” 

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READ: Buhari to commission Lagos-Ibadan railway January 2021, starts operation November 2020

“There is the assurance of Mr. President that Nigerians will be beneficiaries of the Siemens project which will turn around the power supply situation of Nigeria. When this happens, industries will be revived and SMEs driven by youths will thrive more. 

READ: Senate summons Fashola, Ahmed over contract sum variation for Second Niger Bridge, others

What you should know 

  • The initiative is expected to commence with a target for one-million-meter installation at least by December.  
  • The implementing agencies of the initiative are the Rural Electrification Agency and the Niger Delta Power Holding Company. 
  • However, the Central Bank of Nigeria is supporting local firms and Meter Asset Providers on financing the initiative. 
  • The National Power Training Institute of Nigeria (NAPTIN) is expected to play an active role in order to ensure that more youths become solar power installers and dealers to create a whole new trend of skills for self-empowerment. 

READ: N75 billion Nigerian Youth Investment Fund to be rolled out before end of October – Minister

Why this matters 

The 5 million Solar project initiative will be implemented through the Economic Sustainability Plan steered by Vice President Yemi Osinbajo, and it is expected to create opportunities for manufacturers of solar panels, installers, revenue collection agents and technicians. 

This initiative is expected to reduce the level of unemployment in Nigeria, and cater to demands for better opportunities by the youths, through self-employment. 

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