Voser adds 1,000 to Shell jobs cull

ROYAL Dutch Shell has warned that it is cutting a further 1,000 jobs as it admitted its structure was too complicated to respond to the recession.

Delivering its annual strategy update, the oil and gas giant said it was planning to reduce its workforce by 2,000 by the end of 2011, 1,000 more than previously announced. It gave no details about where the cuts would fall.

Chief executive Peter Voser, who has axed 5,000 jobs since he was appointed last year, said that when he was promoted to the role Shell was unable to respond to challenges that the recession had thrown up.

"The company had become too complicated and slower to respond than we'd like. So we are sharpening up," Voser said.

"The priorities are for a more competitive performance, for growth and for sharper delivery of strategy. We have more to do to drive out cost and improve the operating performance in the company."

Shares in the company rose after it said it would boost its production by 11 per cent by 2012, more than it had previously forecast, while announcing plans to sell more assets.

Europe's largest oil company, which is headquartered in the Hague, said it expected to produce 3.5 million barrels of oil a day in 2012, which would reverse years of declining production.

Rising production will come from capital expenditure of at least $25 billion (16.8bn) a year in the years to come, a move that prompted Shell to warn that its 2010 dividend would be frozen at 2009 levels.

The company will also raise money by selling a major chunk of its downstream assets.

Shell said it was aiming to raise about $3bn a year by selling 15 per cent of its refining assets and more than a third of its petrol stations.

Voser said the company would withdraw from retail operations in about 30 of the 90 countries it operates in.

"For me, this portfolio is too scattered and not focused enough on profitability and growth."

There have been growing worries that Shell's cash flow will not support its dividend payments in the long term.

Voser attempted to dismiss the concerns, claiming that, with the cost-cutting measures the company was planning, its cash flow would increase by 2012 if the price of crude oil was about $60 a barrel, below the current price.

The company has already put some of its assets in Nigeria up for sale, and has named Australia as a key future region. However Voser declined to say whether it would raise its bid for Arrow Energy, an Australian producer of coal-seam gas.

Shares in Shell closed up 26.5p at 1,856.5p.