Shell to spell out wide-ranging cuts
Monday 14 December 1998
The Anglo-Dutch group is scheduled to brief oil industry analysts in London and New York and markets are braced for huge asset write-downs, disposal plans and possibly another profits warning.
Shell declined to comment on the possible implications for jobs yesterday ahead of the presentations by Mark Moody-Stuart, Shell's chairman.
Shell has already embarked on a major European shake-up that will result in 3,000 job losses. This has included the closure of four headquarters offices including the landmark Shell Mex House on the Strand in London. It is not known if any news on jobs today will be in addition to the redundancies already announced.
Like other oil groups, Shell has been hit by a double whammy of 12-year lows in the price of oil and falling demand in crisis-hit Asia.
Analysts predict that Shell will write off up to pounds 3bn from previous valuations of the company's assets.
Jim Wood-Smith, head of research at stockbroker Greig Middleton, said: "Shell has been somewhat behind its rivals in cutting costs. It has a famously bureaucratic management structure. This means there is plenty of room for efficiencies and job cuts are inevitable."
The group has already announced the likely closure of its 92,000 barrels a day Shell Haven refinery in the UK and has declared production cuts and sell-offs of a number of European sites.
One analyst said Shell would be looking to sell parts of its chemical and coal divisions, while there may also be further European refinery cuts to come. Industry experts have said that 15 per cent of the production capacity in Europe's refineries needs to be cut to bring stability to the market.
Regional closures announced in the last few months have seen 6,000 Shell jobs earmarked for the axe. Meanwhile, the largely Aberdeen-based Shell Expro joint venture with Esso has been shedding 200 North Sea jobs annually for around seven years.
Shell wants to slim down its management team to speed up decision making. It also wants to re-organise its reporting structure, which is currently established on a regional and business division basis.
The group announced last week that it had appointed Paul Skinner and Phil Watts as chief executives at its key oil products, and exploration and production divisions respectively, replacing committees of executives.
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