Shell's cuts signal greener future
Since the independence referendum of 2014, when it was predicted that the first years of independence would see up to £7.9 billion in North Sea taxes for the Scottish Treasury, revenues from oil and gas corporation tax have slumped to barely £1bn.
Shell’s job cuts, part of a cost-cutting drive which is expected to deliver annual savings of $2bn to $2.5bn by 2022, come after rival BP also cut its dividend and announced it was cutting 10,000 jobs out of its global workforce of 70,000.
Just five months ago, Shell cut its dividend for the first time since World War Two – a move perhaps as startling as John Lewis and Partner’s recent announcement that it would not pay out a bonus to its staff for the first time since the same period.
The company has been hard-hit, like many others, by the pandemic – not least at a personal level, paying tribute today to six members of staff who have lost their lives to Covid-19. Financially, too, it has taken a blow. Shell saw a 46 per cent fall in first-quarter net income to $2.9bn (£2.3bn), while second-quarter income fell 82 per cent to $638m.
Shell, which employs 83,000 people worldwide, including 6,000 in the UK, warned today that it wants to become a “simpler, more streamlined, more competitive organisation that is more nimble and able to respond to customers”.
It has an ambition to become a net-zero emissions energy business by 2050 or sooner. Chief executive Ben van Beurden today said that its future mix would continue to include some oil and gas, but that it would also incorporate predominantly greener forms of energy such as low-carbon electricity, low-carbon biofuels and hydrogen.
However, what is undoubtedly a difficult transformation for Shell could end up being a bright opportunity for Scotland, albeit not immediately.
Green energy - including wind energy, both on and offshore and even the uncertain progress of wave energy - has been tipped by economists as a possible driver of the Scottish economy in a post-pandemic world.