JULY 31 (Reuters) — Job cuts and falling profits at Royal Dutch Shell are the latest indication of how prolonged low oil prices are taking their toll.
Profits in the second quarter were 37 percent lower than last year.
Net income was $3.8 billion, down from more than $6 billion a year earlier, missing analysts forecasts.
It’s to axe 6,500 jobs to help mitigate the impact.
Ben van Beurden, Chief Executive, Royal Dutch Shell said, that today’s oil price down turn could last for several years, of course we don’t have a crystal ball, nut Shell planning assumptions reflect today’s market realities so we are planning on a prolonged downturn.
The Anglo-Dutch group said operating costs would fall by around 10 percent
It will reduce capital investment for a second time this year to $30 billion, down 20 percent.
And it plans to offload $30 billion of asset sales over the next three year, to take the total to $50 billion.
That will help it go ahead with a planned $70 billion acquisition of BG Group.
“I think in this environment, especially for the commodities industry where we could be at the end of the commodity boom, the start of a prolonged commodity down turn, it’s all about the efficiencies,” Kathleen Brooks, Research Director at City Index said.
Another energy firm making job cuts is Centrica.
The owner of British Gas and the UK’s largest utility firm will see 4,000 staff go as Centrica focusses on energy supply and services.
There was bad news for Spain’s Repsol too – it posted a 20 percent decline in second quarter net profit – and Italy’s oil and gas group Eni also saw profits slump.
