Chinazor Megbolu |
In response to the ravaging effects of Covid-19 pandemic,, the Dutch Shell has said its cutting cost towards maintaining operations in Nigeria.
The oil and gas giant in a statement, disclosed that the plan is to focus its oil and gas production on a few key hubs.
Shell named Nigeria, the Gulf of Mexico, and the Northern Sea regions, going forward as the hubs they are focusing on cutting cost spree.
The conglomerate maintained that it’s necessary in order to help increase savings and overhaul its business operations, as it strategies more on renewable energy and power markets.
Shell stressed further that the organisation is exploring ways towards ensuring that the spending on oil and gas production is reduced.
Shell added the reduction will affect its largest division of upstream by 30 per cent to 40 per cent in terms of cuts in operating costs and capital spending on new projects.
According to Shell; “we are undergoing a strategic review of the organisation, which intends to ensure we are set up to thrive throughout the energy transition and be a simpler organisation, which is also cost-competitive.
“We are looking at a range of options and scenarios at this time, which are being carefully evaluated”.
The statement noted that the Chief Executive Officer, Royal Dutch Shell Plc, Mr. Ben van Beurden, had in July, 2020 hinted the group was on track to deliver $3 billion to $4 billion in cost savings by the end of March 2021.
He also maintained the savings will be done through job cuts and suspending bonuses.
Beurden also said that Shell is pressing ahead with plans to reduce the number of its oil refineries to 10 from 17 in 2019, adding that three is already up for sale.
He, however, averred the cost cutting was a result of the menace of Covid-19 pandemic as well as company’s plans to slash its carbon emissions to net-zero by 2050.
The statement buttressed the operating costs, in terms of production, manufacturing, sales, distribution, administration, and research and development expenses, decreased by 15 per cent at $7 billion, between 2014 and 2017.
It also stated that last year, the company’s overall operating costs hit $38 billion and capital spending was put at a total cost of $24 billion