Royal Dutch Shell Plc will cut additional 2,200 jobs as the world’s second-largest oil company continues to adjust to the slump in prices. This will take the total job cut between 2015 and 2016 to 12,500.
The company is expected to cut at least 5,000 jobs this year, these reductions are in response to oil prices staying lower for a longer period, and as a result of the acquisition of BG Group Plc, said Paul Goodfellow, Shell’s vice president for the U.K. and Ireland.
“These are tough times for our industry,” Goodfellow said in a statement. “We have to take further difficult decisions to ensure Shell remains competitive through the current, prolonged downturn.”
The industry is cutting deeper despite oil’s 80 percent recovery since January. Prices remain about half the level two years ago and companies’ earnings have been pummeled, debt has increased and credit ratings have been cut. To help protect their balance sheets they have deferred or canceled billions of dollars of projects, renegotiated contracts with suppliers and eliminated thousands of jobs.
Shell’s adjusted net income fell 58 percent to $1.6 billion in the first quarter following the collapse in prices. The company bought BG Group for $54 billion this year to get access to oil and natural gas reserves from Australia to Brazil. The purchase has increased its debt to $70 billion and driven up its ratio of net debt to capital to above 26 percent.