and this....
Shell Cuts U.S. Staff, Latest Victim Of Low Oil Prices
05:47 p.m Oct 09, 1998 Eastern
By Paul Thomasch
NEW YORK (Reuters) - Shell Oil Co., the U.S. unit of Royal Dutch/Shell Group, said Friday it will cut 20 percent from its U.S. exploration and production workforce in the next few months, making it the latest company put on the defensive in the face of severely low oil prices.
Shell plans to slash 740 jobs from its nationwide exploration and production workforce of 3,700, with offices in New Orleans and Houston expected to be hardest hit by the cuts.
The reductions should be completed by year's end, a company spokeswoman said Friday, adding that the cuts will affect a broad range of jobs.
Shell said the move is part of a wider ''cost-structure review'' in the face of oil prices that have dropped by more than 25 percent, or $5 a barrel, in the last 12 months.
''In order to achieve the level of cost improvement necessary, it appears that a reduction in our (U.S. exploration and production) workforce level will unfortunately be necessary in order to help us deal with this low price environment for the foreseeable future,'' Shell said in a statement.
The move serves as a sharp reminder of the threat that a dramatic and lasting downturn in oil prices can pose even to the major integrated oil companies such as Shell, Exxon Corp. or Texaco Inc. , and to ''oil towns'' like Houston.
''This city and this region have made a concerted and successful effort to diversify,'' said David McCollom, a spokesman for the Greater Houston Partnership, a business group which represents a city that is home to more than a quarter of Shell's exploration and production staff.
''But oil is still a big part of the economy...and it's always a concern when energy prices and the industry have a setback.''
Shell had recently hinted that the cuts could be coming, and said it detailed the specifics of the cuts in a memo sent out to staff earlier in the week. The company said it plans to notify staff on Oct. 21 if they will be included in the reductions, adding it has set Dec. 31 as the departure date for most of those laid off.
The announcement Friday comes less than a month after Royal Dutch/Shell said it was vacating four of its national head offices in Europe. The Anglo-Dutch oil company hasn't yet said how many jobs will be lost because of the closures.
''Overall, we expect that the business conditions in the second half of the year will be significantly worse than in the first half,'' the group's chairman, Mark Moody-Stuart, said in a speech when the closures were announced on Sept. 18.
Meanwhile, concerns that returns in the oil sector will remain under pressure also have been one of the driving forces behind a recent rush of mergers and acquisitions, which allow companies to reduce overlapping jobs and offices and save on capital costs.
The latest of the combinations was unveiled Thursday, when Ultramar Diamond Shamrock Corp. and Phillips Petroleum Co. said they were merging their U.S. refining and marketing businesses. The deal is expected to save the new company, Diamond 66, about $300 million, roughly a third of which will come from slashing 1,000 jobs.
Also, British Petroleum Co. Plc and Amoco Corp. plan to initially cut about 6,000 jobs, most of which are expected to come out of the U.S, as part of the companies' agreement last month to merge their operations.
Texaco this month will cut about 20 percent of its staff, or 100 jobs, at its headquarters in White Plains, N.Y., while Los Angeles-based Atlantic Richfield Co.'s Chairman and Chief Executive Officer Mike Bowlin cautioned employees in a recent letter that the company would have to go through a cost-cutting program of its own to remain competitive.
For Shell's part, the company has said that while no additional layoffs are planned, it has not ruled out other cost-cutting measures, including the sale of some of the exploration and production unit's assets.
Copyright 1998 Reuters Limited. |
