As the price of a Brent barrel is trading at nearly half of what it was at the beginning of the year, Royal Dutch Shell Plc (NYSE: RDS.A) is planning on offering some staff voluntary severance, according to Bloomberg sources.
In a note to its staff, Shell CEO Ben van Beurden said that the Dutch oil major was working to become leaner and more resilient, according to the Bloomberg sources who saw the correspondence.
The move comes after Shell cut its dividend in April for the first time since 1945—by two-thirds—in what even Shell considered an “inevitable moment” given the oil price route and uncertainty around demand. Shell also cut spending in March, by $5 billion per year compared to 2019 levels, to $20 billion.
Shell may also make more job cuts in the second half of the year, the sources said.
Shell said it would “go through a comprehensive review of the company,” adding that “where appropriate, we will redesign our organization to adapt to a different future and emerge stronger,” Shell told Bloomberg today.
The oil price crunch has caused almost all companies to take a look at their financial plans. Already, the oil and gas industry in Texas alone has seen more than 30,000 jobs cut, and that figure is weeks old and will likely grow. Even as the United States begins to emerge from its restrictive lockdowns that has taken a chunk out of oil demand, it is widely expected that this demand will not snap back full force in the coming weeks, and many oil and gas companies—including the national oil companies–are prudently reviewing how their current strategies will fit into this gloomy outlook on oil demand and are making painful changes as necessary.