Shell to cut more low-carbon jobs and cut back on investments amid an overhaul
26 Oct 2023
Shell Oil Corporation, one of the largest in the world, will cut at least 15% of the workforce in its low-carbon solutions division and cut back on its hydrogen business to boost profits. This decision was made by CEO Wael Sawan on Wednesday, 25 October, 2023.
Sawan took on the leadership role in January 2023 and has started to make staff cuts and organizational changes to restructure Shell’s business strategy and focus on higher-margin projects, steady oil outputs, and increased production of natural gas.
It has been reported that Shell will cut 200 jobs in 2024 and has further placed 130 more positions under review. This step is being taken in order to reduce the workforce of the unit, which currently stands at 1,300 employees.
Some of these positions will be merged into other divisions at Shell. The total workforce of the oil corporation currently stands at 90,000 people.
The company stated its intention to transform its Low Carbon Solutions (LCS) business to strengthen its delivery approach in business areas such as transport and industry.
The LCS operations include the use of hydrogen in order to decarbonize the transport and industry sectors. They do not include the renewable power business.
The job cuts and organizational changes were announced by the shell managers of the LCS division in several town hall meetings that were held last week.
The division’s carbon capture and storage and nature-based solution businesses will not be affected by the current round of cuts. The hydrogen business will be the main focus of the change.
Shell wants to shift their focus from hydrogen light mobility operations, which create technologies for light passenger vehicles, to heavy mobility and industry. Shell is also planning to merge two of the four general manager positions in the hydrogen business.
Oliver Bishop, the former business manager of the light mobility division at Shell Oil Corporation, left the company several months ago and is now heading rival BP’s global hydrogen mobility business. Shell was one of the earliest promoters of hydrogen-fueled cars, but in recent years, there has been a decrease in the number of hydrogen fueling stations around the world. This is due to consumer’s preference shifting towards electric vehicles.
In 2022, Shell started building a 200-megawatt electrolyser plant in the Netherlands to produce zero-carbon, or green, hydrogen. An application was also issued by Shell to receive permission to build a low-carbon hydrogen hub in Louisiana, USA. Unfortunately, the project was not listed among the seven that were announced in early October that will share $7 billion in U.S. federal grants to accelerate the emerging industry.
Shell Oil Corporation has identified their global hydrogen portfolio as an integral part of the efforts to address the commercial and technical challenges in scaling Low Carbon Solutions Business.
NET ZERO
Wael Sawan stated last week that Shell wants to direct its attention towards its plan to become a net-zero carbon-emitting company by 2050.
Sawan came under some scrutiny in September 2023 after two of his employees issued an open letter requesting him not to cut back on investments related to renewable energy. This created a ruckus inside Shell Corporation.
The last few years have seen a dip in shares of oil companies such as Shell, BP, and TotalEnergies due to investors getting cold feet over future returns.
U.S. oil companies such as Exxon Mobil and Chevron have increased oil production and also acquired some oil companies in recent months.
