Shell Plans to Cut 4,300 Oil Exploration Jobs

Shell is planning to shed up to 4,300 global oil-exploration jobs over the next four years in a move to cut costs by up to $800m a year and boost profits that slumped 23% last year.

Walter van der Vijver, group managing director and head of Shell's exploration&production division, said yesterday that the group planned to shed up to 15% of staff in the business and associated companies by 2006. The unit, Shell's most profitable, employs 28,600 people worldwide.

Company officials said they were unable to give details of where the job cuts will fall as there would be variations from region to region but the British North Sea is unlikely to escape lightly.

Shell, which is already shedding 350 staff and contractors from its offshore platforms in the North Sea, is also planning to sell "less than 5%" of its UK oil assets over the next two years, executives said.

The sale, part of a drive to raise more than $500m through the disposal of British and American assets, stems from last year's acquisition of Enterprise Oil, which is expected to yield $220m in annual savings.

North Sea fields already marked for potential sale include Montrose, Arbroath, Alba, Orion, Magnus and Foinaven East. But executives insisted that Europe remained "very attractive over the long term".

Giving a strategy update to investors, executives said the aim was to deliver pre-tax "performance improvements" of $500m to $800m via a global reorganisation of the oil business into five regional units. These are on top of the savings associated with Enterprise.

The world's second largest energy firm, which is investing $8bn-$9bn a year in oil and gas, wants to boost annual earnings by 6%-8% and raise returns on capital back closer to the 13%-15% target range by 2004 from last year's 12.5%.

Shell, whose output has been hit by ethnic violence in Nige ria, is counting on new projects in the likes of Canada and Brazil to boost oil and gas production by an average of 3% a year between 2000 and 2007.

But executives refused to set this as a target yesterday after Shell and other groups such as BP suffered substantial falls in their share price last year for failing to meet such targets.

Mr van der Vijver reaffirmed Shell's commitment to Nigeria where the group is investing $1bn this year in new deep-water fields. But the ethnic violence in the run-up to next month's general election has meant the deferred production of 370,000 barrels a day from normal output of some 900,000 barrels, mainly on staff safety grounds.

Under pressure to give more details about Shell's ability to replace operating oil fields with new reserves, Mr van der Vijver refused to give any promises.

Executives said investments such as in the Athabasca oil sands in Canada would result in stable output for 40 years.