Shell to cut at least 250 North Sea jobs to remain 'sustainable'

Slump in of oil price has accelerated the need for restructuring, which will include increased hours for workers, says Anglo-Dutch group

Shell will cut at least 250 jobs this year and increase workers’ hours at its North Sea operations following the sharp drop in the price of oil.

The cuts to staff and agency contractors represent more than 10% of Shell’s workforce of 2,400 in the North Sea. They are in addition to the 250 announced in August, before the oil price started to plunge.

The cost of a barrel of crude remained below $60 yesterday, even after bouncing in response to political turmoil in the Middle East.

The Anglo-Dutch oil group said employees and agency workers in Aberdeen and on North Sea rigs were told about the cuts on Thursday.

Shell also said it would increase employees’ working hours. Its North Sea staff work on a pattern of two weeks on, two weeks off, followed by two weeks on, four weeks off. Shell has proposed three weeks on, three weeks off as a way to increase working time to half on–half off over a year.

Shell said the cuts and changes to workers’ terms were not solely a reaction to the near-halving of the oil price since last summer but that the plunge had made its actions more necessary.

Paul Goodfellow, Shell’s vice-president of exploration and production for the UK and Ireland, said: “The North Sea has been a challenging operating environment for some time.

“Current market conditions make it even more important that we ensure our business is competitive. Changes are vital if it is to be sustainable. They will be implemented without compromising our commitment to the safety of our people and the integrity of our assets.”

The GMB union criticised Shell for announcing its intentions before the result of a ballot of its members is announced on Friday. The union has accused energy companies of using the low oil price to undermine workers’ pay and conditions.

David Hulse, GMB’s national officer for UK offshore oil and gas, said: “Talks are deadlocked and we are still miles apart over pay, changes to rosters and holiday arrangements, and staffing levels. Unilateral action by employers will make matters worse.”

BP has shed hundreds of jobs in Aberdeen and thousands around the world. It has also frozen pay for its workers.

Wood Group, the energy services company, has also said it will lay off workers this year because of the falling oil price. Sir Ian Wood, its founder, has said up to 10,000 jobs could be lost in the North Sea over the next 18 months.

Britain’s offshore oil and gas industry employs about 375,000 people. A report by the consultants EY last year said almost 10% of those jobs could disappear over the next five years.

The chancellor announced tax breaks for the North Sea oil industry in last week’s budget but Shell said they did not go far enough. Companies and unions have called for radical tax changes to support the industry.

Shell said the tax changes were a help but not enough on their own to make the industry viable.

“Reforms to the fiscal regime announced in the budget are a step in the right direction, but the industry must redouble its efforts to tackle costs and improve profitability if the North Sea is to continue to attract investment,” Goodfellow said.

Contributor

Sean Farrell

The GuardianTramp

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