More jobs to go as $8bn charge and cheap oil push Shell into record loss

Chief financial officer Simon Henry said the company would need to continue to cut costs

A Greenpeace activist covers the logo of the Shell oil company to protest on May 10, 2012 against the heading of the an icebreaker for Shell's Arctic oil drilling project (Getty)

Shell has warned of further job cuts as it took an $8.2bn (£5.5bn) hit from project cancellations in Alaska and Canada and the low oil price and fell to a record quarterly loss.

Announcing the $7.42bn third-quarter loss, the chief financial officer Simon Henry said Shell would need to continue to cut costs in the face of persistently low oil prices – which averaged $51.30 a barrel during the period, down from $115 last summer.

The loss compared with a $4.46bn profit for thesame period in the year before. It was driven by a $2.6bn charge relating to Shell’s ill-fated attempt to produce oil in Alaska, which it abandoned last month after a decade-campaign that failed to find any meaningful quantities of hydrocarbons.

Shell also took a $2bn hit after halting construction of its Carmon Creek thermal oil sands venture in Canada this week due to the “uncertainties” facing the project – including a lack of infrastructure such as pipelines – and a $2.3bn writedown on its North American shale assets as rcognition of the darkening outlook for oil and gas prices.

Mr Henry warned that the low-price environment was likely to result in additional redundancies – which already stand at 7,500 job losses this year – as the group continued to reduce its costs.

“We are looking very closely at our establishment – ie, the number of people we employ, where we employ them and how we do the work that we do as we go forward,” he said.

“There is an ongoing review, and in our total cost base around 35 per cent is directly related to manpower... It is a very important part of our balance but we do not set headline targets to reduce numbers.”

Mr Henry added: “There is not a big programme but it is certainly the case that in various activities, in various countries, we will continue to drive costs down.”

The Shell chief executive Ben van Beurden explained that he would respond to the collapse in prices by making the company “more focused and competitive”.

“These charges reflect both a lower oil and gas price outlook and the firm steps we are taking. These are difficult but impactful decisions,” he said .

The group said it would maintain its third-quarter dividend at 47 cents a share, but the downbeat City update still sent its shares down 25.5p, or 1.4 per cent, to 1,717p.

Shell’s third-quarter revenue dived from $107.9bn to $68.7bn while adjusted profits slumped 70 per cent to $1.8bn.

Mr van Beurden added that the company’s proposed £39.8bn takeover of BG Group, announced in April, remained “on track” to be completed early next year.

Shell’s results come two days after rival BP reported a 40 per cent decline in its third-quarter profits to $1.8bn and also warned of further job cuts.

“We have been working to reset and rebalance activity in BP for about a year and a half now – and, as a result, there has been an impact on jobs,” the BP chief executive Bob Dudley said. “By the end of the year there will be about 4,000 fewer BP employees than at the start; this does not include contractor staff.”

A BP spokesman confirmed there would be “a further impact on headcount”, but did not give further details.