Shell CEO announces job cuts and reduced focus on hydrogen in company overhaul.
Breaking News: Shell to Cut Workforce and Scale Back Hydrogen Business
LONDON (Reuters) – In a bold move to boost profits, Shell (SHEL.L) announced on Wednesday that it will be reducing its low-carbon solutions division by at least 15% and making significant changes to its hydrogen business. This decision comes as part of CEO Wael Sawan’s strategy to revamp the company’s approach and focus on higher-margin projects, steady oil output, and natural gas production.
The workforce reductions and organizational changes are a result of Sawan’s commitment to streamline Shell’s operations and prioritize projects with higher profitability. The company plans to cut 200 jobs in 2024 and is reviewing an additional 130 positions. These changes will affect the low-carbon solutions division, which currently employs around 1,300 people. However, Shell aims to integrate some of these roles into other parts of the company, which has a total workforce of over 90,000 employees.
Shell stated, “We are transforming our Low Carbon Solutions (LCS) business to strengthen its delivery on our core low-carbon business areas such as transport and industry.” The company’s shares were down 0.2% following the announcement.
The LCS operations encompass various businesses focused on decarbonizing the transport and industry sectors, excluding the renewable power business. Shell recently held town hall meetings with the LCS division to communicate the job cuts and organizational changes. The carbon capture and storage and nature-based solutions businesses within the division will not be affected by these cuts.
One of the key areas of focus for the changes is Shell’s hydrogen business. The company plans to scale back its hydrogen light mobility operations, which develop technologies for light passenger vehicles, and shift its focus to heavy mobility and industry. As part of this restructuring, Shell will merge two general manager roles in the hydrogen business.
Shell’s decision to reduce its presence in the light mobility sector follows the departure of Oliver Bishop, the former manager of the business. Bishop now leads BP’s global hydrogen mobility business. Shell has previously invested in hydrogen-fueled cars but has closed several hydrogen fuelling stations worldwide as consumer preference shifted towards electric vehicles.
Despite these changes, Shell remains committed to its global hydrogen portfolio and its efforts to address commercial and technical challenges in scaling its Low Carbon Solutions business. The company emphasized that it will prioritize investments that have the highest chance of creating value and reducing emissions.
NET ZERO
Shell’s CEO, Wael Sawan, recently stated that the company is adjusting its pathway to achieve its goal of becoming a net zero carbon emitting company by 2050. Sawan clarified, “For avoidance of doubt, what hasn’t changed is the destination that we have set for ourselves.”
Shell faced internal pressure last month when two employees publicly urged Sawan not to reduce investments in renewable energy. This sparked an internal debate within the company. Shell, along with European peers BP and TotalEnergies, has faced investor concerns over future returns as they transition away from oil and gas production. In contrast, U.S. rivals Exxon Mobil and Chevron have increased their focus on fossil fuel production through large acquisitions.
Reporting by Ron Bousso; editing by Jason Neely and Jan Harvey
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What is the reasoning behind Shell’s decision to reduce its workforce and scale back its hydrogen business?
Breaking News: Shell to Cut Workforce and Scale Back Hydrogen Business
LONDON (Reuters) – Shell (SHEL.L) announced on Wednesday that it will be reducing its low-carbon solutions division by at least 15% and making significant changes to its hydrogen business in order to boost profits. This decision is part of CEO Wael Sawan’s strategy to revamp the company’s approach and focus on higher-margin projects, steady oil output, and natural gas production.
The workforce reductions and organizational changes are a result of Sawan’s commitment to streamline Shell’s operations and prioritize projects with higher profitability. The company plans to cut 200 jobs in 2024 and is reviewing an additional 130 positions. These changes will primarily affect the low-carbon solutions division, which currently employs around 1,300 people. However, Shell aims to integrate some of these roles into other parts of the company, which has a total workforce of over 90,000 employees.
Shell stated that they are transforming their Low Carbon Solutions (LCS) business to strengthen its delivery on their core low-carbon business areas such as transport and industry. Despite this announcement, the company’s shares were only down 0.2%.
The LCS operations encompass various businesses focused on decarbonizing the transport and industry sectors, excluding the renewable power business. Shell has recently held town hall meetings with the LCS division to communicate the job cuts and organizational changes. The carbon capture and storage and nature-based solutions businesses within the division will not be affected by these cuts.
One of the key areas of focus for the changes is Shell’s hydrogen business. The company plans to scale back its hydrogen light mobility operations, which develop technologies for light passenger vehicles, and shift its focus to heavy mobility and industry. As part of this restructuring, two general manager roles in the hydrogen business will be merged.
Shell’s decision to reduce its presence in the light mobility sector follows the departure of Oliver Bishop, the former manager of the business. Bishop now leads BP’s global hydrogen mobility business. Shell has previously invested in hydrogen-fueled cars but has closed several hydrogen fuelling stations worldwide as consumer preference shifted towards electric vehicles.
Despite these changes, Shell remains committed to its global hydrogen portfolio and its efforts to address commercial and technical challenges in scaling its Low Carbon Solutions business. The company emphasized that it will prioritize investments that have the highest chance of creating value and reducing emissions.
Shell’s CEO, Wael Sawan, recently stated that the company is adjusting its pathway to achieve its goal of becoming a net-zero carbon emitting company by 2050. Sawan clarified, “For avoidance of doubt, what hasn’t changed is the destination that we have set for ourselves.”
Shell faced internal pressure last month when two employees publicly urged Sawan not to reduce investments in renewable energy. This sparked an internal debate within the company. Shell, along with other major energy companies, is under increasing pressure to accelerate the transition to cleaner energy sources and reduce its carbon footprint.
In conclusion, Shell’s decision to cut its workforce and scale back its hydrogen business reflects the company’s focus on higher-margin projects and profitability. While these changes may impact some employees, Shell remains committed to addressing the challenges of decarbonization and achieving its net-zero goals.
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