Shadow over thousands as new Shell chief makes his mark

Rosamund Urwin
27 May 2009

Royal Dutch Shell today unveiled plans for a radical shake-up affecting 24,000 staff as its new chief executive Peter Voser asserted his authority in the boardroom.

The restructuring is expected to result in substantial redundancies and sees a major change in the role of Malcolm Brinded, who was passed over for the top job in favour of Voser.

Shell is merging its exploration and production arms with its gas and power and oil sands businesses.

The upstream divisions, which have 22,000 employees, will be reorganised into two separate businesses: Upstream Americas, covering North and South America, and Upstream International, focusing on the rest of the world.

Brinded, a Cambridge-educated Brit who is currently Shell's head of exploration and production, will head the Upstream International division, losing responsibility for the North and South American upstream operations.

Marvin Odum will lead the American division, which the company considers a major area for growth in the coming years.

However, Brinded will now take charge of most of Shell's liquefied natural gas operations, which are focused outside the Americas.

Details of the restructuring emerged after the departure yesterday of Linda Cook, who had headed the company's liquid natural gas division.

Her abrupt exit after nearly three decades with the group, sparked speculation that a reorganisation was on the cards.

The restructuring will result in an unspecified number of job cuts at its upstream division, which employs 22,000 and has operations in Aberdeen.

The Anglo-Dutch oil giant is also streamlining its operations at its head office in the Hague, which employs 2,000 people.

Shell's A shares slipped 26p to 1621p while its B shares lost 24p to 1639p as sector experts warned that the company has been too slow to restructure.

Jason Kenney, an oil analyst at ING, said that the restructuring serves as an admission by Shell that its costs are "unsustainably high" and that the company has been too slow to make decisions.

He said that the company will be looking to save "in the 100 million dollars if not low billions" over the next two years with headcount and cost cuts.

Managers at the company will receive further details of the restructuring at a two day meeting in Berlin which ends tomorrow.

A survivor's tale

The 56-year-old Brit, with Royal Dutch Shell since 1974, has got through the 2004 reserves scandal, several downgrades of production targets, a host of delayed projects and, today, Peter Voser's huge rethink of the oil giant.

He loses part of his exploration and production brief, but stays at Voser's right-hand side. Given yesterday's departure of Linda Cook, his opposite number in the gas division and fellow bidder for the top job, this was far from certain.

Concerns over his age and his close connection with a large number of projects which have seen delays or costs over-runs are thought to have put paid to his ambitions to be chief executive.