Shell prepares for major overhaul

THE first ripples of a dramatic restructure of energy giant Shell's global business have reached Perth as the company seeks to slash its cost base, stay competitive and speed up its project development decision-making.

Shell has confirmed to WA Business News that staff from its 300-strong Perth upstream business unit were summoned to its QV1 office last Friday afternoon for a briefing on the restructure devised by the group's new global chief executive, Peter Voser.

But the company also denied that staff were warned the restructure may include major job cuts in Australia, which remains crucial to Shell's long-term growth plans.

"As announced by our new global chief executive Peter Voser at end May, Shell is reorganising some of its businesses to ensure our structure is simpler to improve our performance on delivering new projects and developing new technologies," a Shell spokeswoman said.

"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.

"Australia remains a key focus country for Shell. A significant proportion of Shell's near-term capital investment is focused on Australia, which we see as a growth country for Shell, particularly in gas exploration and production activities."

Under the restructure to take effect this month, Shell will merge its three key upstream exploration and production businesses into two major divisions along geographic lines.

The new 'upstream Americas' unit will host all of Shell's upstream assets in North and South America, while the Australian assets will be housed within the new 'upstream international' division. The proposal also envisages further consolidation of Shell's corporate functions.

Shell is a partner in several world-class LNG projects in Australia, which are currently subject to advanced development studies, including the Chevron-led Gorgon LNG project, the Gladstone LNG project in Queensland, the Sunrise LNG project in the Timor Sea, and the Browse and Prelude gas projects off the Kimberley coastline.

The company has also earmarked about 10 per cent of its global exploration budget to increasing its gas reserves in Australasia.

According to senior industry sources, as many as one in three positions across Shell's global workforce could be affected by the restructure.

Shell this week rejected such speculation, but stood by previous guidance that thousands of positions would be affected worldwide.

In an internal email to all staff in late May, Mr Voser claimed the restructure was necessary because oil and gas prices had reverted to 2004 levels, while Shell's cost base had doubled.

Furthermore, Shell had become too organisationally complex, meaning the company took too long to make strategic decisions such as proceeding with major projects.


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