Shell to cut 5000 jobs as part of restructuring

Owing to the weak global economy, Royal Dutch Shell reported a sharp drop in third-quarter earnings and production on Thursday and said it would downsize by 5,000 jobs.

The jobs would be cut from the Anglo-Dutch oil and gas group as part of a restructuring that began earlier this year.

The job losses are part of a programme called Transition 2009, which was put in place by Peter Voser, who started as chief executive in July. The cutbacks represent some 4.9 per cent of the corporation's 102,000-member staff, and almost 10 per cent in those divisions that Shell is merging.

Voser said: "The corporation had to take stringent measures to further improve our performance and its competitive cost position."

Although the corporation had "some indications that energy demand and pricing are improving," he added, "the outlook remains very uncertain, and we are not expecting a quick recovery".

The chief executive added the reorganisation, due to be completed by the end of the year, was "progressing well" and had already reduced operating costs by £1 billion in the first nine months of this year.

The energy giant said production in the third quarter amounted to 2. 93 million barrels a day, lower than the 3.39 million barrels analysts had counted on.

Shell's third quarter earnings on a current cost of supplies (CCS) basis were $3 billion compared with $10.9 billion during the same period last year.

Voser said Shell's third quarter results "were affected by the weak global economy."

This was more than the $2.62 billion analysts had predicted. Basic CCS earnings per share decreased by 72 per cent versus the like quarter a year ago.

Net profits amounted to $3.2 billion, compared with $8.5 billion in the like period last year. The decline in oil and gas prices hit Shell's upstream division, which saw profits fall 82 per cent to $1.54bn as oil and gas production fell.