Oil major Shell has confirmed plans to cut between 7,000 and 9,000 jobs in a push to save up to $2.5 billion by 2022.
The company on Wednesday said the move is expected to deliver sustainable annual cost savings of between $2 to $2.5 billion by 2022.
This will partially contribute to the announced underlying operating cost reduction of $3 to $4 billion by the first quarter of 2021.
According to Shell, job reductions of 7,000 to 9,000 are expected, including around 1,500 people who have agreed to take voluntary redundancy this year, by the end of 2022.
In the upstream sector, Shell said it expects production to be between 2,150 and 2,250 thousand barrels of oil equivalent per day, which includes a production impact of 60 to 70 thousand barrels of oil equivalent per day from hurricanes in the US Gulf of Mexico.
Realised liquids prices in the first two months of this quarter reflected a 15 to 20 per cent discount to Brent, similar to the discount in the second quarter of 2020.
Realised gas prices are trending in line with Henry Hub.
Depreciation is expected to be at a similar level as in the second quarter of 2020.
In the area of gas, Shell said it expects production is expected to be between 820 and 860 thousand barrels of oil equivalent per day and LNG liquefaction volumes are expected to be between 7.9 and 8.3 million tonnes.
Trading and optimisation results are expected to be below average.
A one-off tax charge is expected to have a negative impact on Adjusted Earnings in the range of $100 to $200 million; no cash impact is expected in the third quarter.
Approximately 80 per cent of Shell’s term sales of LNG in 2020 have been oil price linked with a price-lag of up to 6 months. Consequently, lower realised prices due to this price-lag are expected to have a significant impact on LNG margins in the third quarter.
Shell said that CFFO can be impacted by margining resulting from movements in the forward commodity curves up until the last day of the quarter.