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Shell to shed 250 North Sea jobs despite a rise in profits

SHELL has become the second major oil company to announce job losses after it said it plans to shed 250 posts from its North Sea operation over the next year.

ALEXANDER KEMP: Said oil firms were looking to make savings.
ALEXANDER KEMP: Said oil firms were looking to make savings.

Employees and contractors will be affected by the cuts, which target onshore positions and follow in the wake of a recent decision by oil and gas conglomerate Chevron to cut 225 jobs in Aberdeen as part of a wider review of its North Sea operations.

Shell produces about 12 per cent of UK oil and gas and has interests in more than 50 North Sea fields. The company operates some 60 offshore and sub-sea installations and three onshore gas plants at St Fergus, Mossmorran and Bacton. It is understood the jobs will go at Shell's office in the Granite City.

Parent company Royal Dutch Shell last week pledged to return more than 30 billion US dollars (£18 billion) to investors over two years as quarterly profits rose by a third. Earnings for the second quarter of 2014, excluding one-off items, increased 33 per cent to 6.13 billion US dollars (£3.63 billion) but chief executive Ben van Beurden said he was determined to get a "tighter grip" on business performance and management.

A Shell spokeswoman said it was reorganising its "upstream onshore operations" to better serve the needs of its offshore facilities. It also planned to build a stronger long-term business in the North Sea.

He added: "Following staff consultation, Shell expects to reduce employee and contractor head count by a total of around 250 positions over the next year.

"Revisions to the onshore organisation will be implemented by the end of 2014.

"Shell is determined to ensure that it continues to deliver safe, competitive operations in its North Sea portfolio and maximises value from its operated assets."

Professor Alexander Kemp, of the University of Aberdeen Centre for Research in Energy Economics and Finance, said that oil companies were looking to make savings against the rising cost of investment and having to satisfy shareholders desire for greater profits.

He said: "Investment in oil production has been extremely high, with last year seeing £14.4 billion spent by the oil companies, an all-time high.

"This has been due to the cost of accessing large and expensive fields, while work is on hold in the Bressay and Rosebank fields.

"Shareholders are also pressing for a greater return on their investments."

The Scottish Government said it recognised that it was a difficult time for workers affected by the announcement and it hoped the redundancy figure could be reduced through restructuring and relocation.

A spokesman said: "We welcome Shell's continuing commitment to the North Sea, particularly their ongoing investment over the next few years of two billion dollars a year in Clair and Schiehallion, and there is no indication that this will impact directly on North Sea production or field development.

"As Oil and Gas UK has said, overall there was £14.4 billion investment in 2013 and the ­industry intends to invest a further £13 billion this year. This provides a clear signal that attractive opportunities still remain in the North Sea."

Meanwhile, the £25 million development of a new deepwater quayside on the Cromarty Firth for the oil, gas and renewable energy sectors, has received £4m backing from Highland and Islands Enterprise (HIE) .

The 35 acre Invergordon Service Base, operated by the Port of Cromarty Firth, has been close to capacity for many years and this funding sees an additional nine acres of land reclaimed.

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