Shell plans to reduce its oil and gas exploration and development workforce by 20% as part of a broader initiative led by CEO Wael Sawan to implement cost-saving measures across its operations. This restructuring will primarily impact the exploration and wells development units, resulting in hundreds of job cuts globally, particularly in Houston, The Hague, and to a lesser extent in the UK.
These planned reductions are still subject to consultations with employee representative bodies. The upstream division, which includes exploration and well development, accounted for over one-third of Shell’s $28.25 billion in adjusted earnings for 2023.
Exploration remains crucial for oil and gas companies to replenish depleting reserves and discover new, profitable resources. Shell has made significant discoveries in Namibia recently, which are currently under evaluation for potential development.
In a statement, Shell emphasized its commitment to creating value with lower emissions, aiming for structural operating cost reductions of $2-3 billion by the end of 2025. Despite the job cuts, Shell’s shares rose by 0.6% following the announcement.
Sawan, who took over as CEO in January 2023, is focused on improving Shell’s performance to enhance profitability and address the valuation gap compared to larger U.S. competitors. The company is also looking to grow its liquefied natural gas division while maintaining steady oil production and concentrating on its most profitable sectors.
Shell has previously scaled back operations in offshore wind, solar, and hydrogen, and has divested from various businesses, including retail power and some oil and gas production assets.