By Adria Calatayud

 

Royal Dutch Shell PLC said Wednesday that it expects to cut between 7,000 and 9,000 jobs by the end of 2022, as the company said it expects to book charges of between $1.0 billion and $1.5 billion in the third quarter.

The oil major said the job reductions include 1,500 people who have agreed to take voluntary redundancy this year. Shell employs around 83,000 people, according to FactSet.

Shell said measures to simplify its organization will deliver annual savings of between $2.0 billion and $2.5 billion by 2022, which will partially contribute to its plan to reduce underlying operating costs by between $3.0 billion and $4.0 billion by the first quarter of 2021.

Chief Executive Ben van Beurden said Shell's streamlining plan will focus on reducing its refining footprint to fewer than 10 sites, keeping those sites that are strategically essential in key locations. The company's upstream operations will focus on accelerating value and generating cash, while integrated gas will seek to unlock new and expand existing markets for liquefied natural gas, or LNG, Mr. Van Beurden said.

Shell said it expects third-quarter upstream production to be between 2.15 million and 2.25 million barrels of oil equivalent a day, including an impact of 60,000 to 70,000 barrels of oil equivalent a day from hurricanes in the U.S. Gulf of Mexico.

Refinery utilization for the quarter is expected to be between 64% and 68%, and realized gross refining margins are expected to be significantly lower than in the second quarter, the company said. Sales volumes of oil products are expected to be between 4 million and 5 million barrels a day, Shell said.

Shell said adjusted earnings from its integrated gas operations will be hurt in the third quarter by a one-off tax charge in the range of $100 million to $200 million. The company expects an adjusted loss from upstream operations, similar to the second quarter.

Third-quarter oil-products adjusted earnings will be hurt by between $200 million and $400 million due to higher volume-driven activity, phasing of maintenance activities and provisions, but this will be partly mitigated by a one-off deferred tax benefit of around $100 million, Shell said. In the company's chemicals operations, adjusted earnings are expected to take a $100 million hit from increased activity, provisions and phasing of maintenance activities.

Integrated-gas production for the third quarter is expected to be between 820,000 and 860,000 barrels of oil equivalent a day, and LNG liquefaction volumes are estimated to be between 7.9 million and 8.3 million tons, with trading and optimization results anticipated to be below average, the company said.

Chemicals manufacturing plant utilization is expected to be between 79% and 83%, with chemicals sales volumes forecast to be between 3.7 million and 4.0 million tons, Shell said.

 

Write to Adria Calatayud at adria.calatayud@dowjones.com

 

(END) Dow Jones Newswires

September 30, 2020 03:18 ET (07:18 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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