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LNG future drives Shell

SHELL'S upstream Australian production unit will have greater say in plotting the energy giant's international growth strategy under a dramatic group-wide overhaul being implemented by the company's new global chief, Peter Voser.

The restructure is aimed at slashing Shell's cost base, which has doubled since 2004, and simplifying its complex organisational structure to enable more timely approval of major projects.

Consequently, Shell's three upstream units will be merged into two major divisions - one housing its Americas-based production assets and the other housing all international upstream businesses, including those in Australia.

WA Business News now understands that the shake-up will also include a revamp of its local management structure, which will give the Australian upstream unit greater influence in the implementation of Shell's global growth strategy.

It is understood a new senior management position, executive vice-president Australia, will be created to run the Australian upstream operations, in tandem with current Shell Australia chairman Russell Caplan.

The new position will have more power than the superseded role of chief operating officer, which has been vacant since Chris Gunner became chairman of Shell Japan in April.

The new EVP Australia is expected to sit on the executive management committee of the new 'upstream international' division, significantly increasing the sway of the Australian unit.

The change reflects the growing importance of Shell's LNG development pipeline in Australia, including major stakes in the Gorgon, Sunrise, Browse and Prelude gas projects off north-west Western Australia, and the Gladstone LNG project in Queensland.

However, the specific details of the local shake-up are yet to be finalised, including the respective responsibilities of the new EVP Australia and current chairman.

The restructure plans are also understood to have created significant uncertainty amid Shell's Australian workforce.

According to industry sources, the restructure will affect up to a third of Shell's global workforce, and involve widespread redundancies.

As reported by WA Business News last week, workers from the WA upstream business were summoned to Shell's Perth office in the QV1 tower for a briefing on the implications of the restructure on July 3.

But Shell downplayed the speculation of local job losses and denied that WA staff had been advised to expect redundancies.

"There has been no meeting or announcement in Australia with regards to job reductions, and we have not issued any target for staff or cost reductions," a Shell spokeswoman told WA Business News last week.

The spokeswoman said a significant proportion of the company's near-term capital investment was earmarked for Australia, because it was considered "a growth country for Shell, particularly in gas exploration and production activities".

Shell has earmarked about 10 per cent of its global exploration budget to increasing its gas reserves in Australia.

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