Quiver Quantitative - Shell (LON:RDSa) (SHELL) has announced plans to decrease its low-carbon solutions workforce by a minimum of 15%, while also diminishing its operations in the hydrogen sector. This restructuring aligns with CEO Wael Sawan's objective to bolster profitability. The announcement follows Sawan's commitment earlier this year to reorient Shell towards higher-margin ventures and to elevate natural gas production while maintaining steady oil output. As a result, 200 positions are set for removal by 2024, with an additional 130 jobs currently under evaluation, from the unit's 1,300-strong staff. Some affected employees will transition into other sectors of Shell, which boasts a global workforce exceeding 90,000.
Shell's Low Carbon Solutions (LCS) division is undergoing this transformation to amplify its impact in core sectors like transport and industry. Notably, while LCS encompasses hydrogen and initiatives focused on decarbonizing transport and industry, it excludes the renewable power segment. This reshuffling predominantly affects the hydrogen branch, with Shell opting to retract from its hydrogen light mobility operations—which centers on light passenger vehicles—in favor of concentrating on heavy mobility and industry applications. This move comes in the wake of the hydrogen business's manager, Oliver Bishop, departing Shell for BP (LON:BP) and Shell's subsequent closure of several hydrogen fueling stations worldwide.
Historically, Shell was a pioneer in championing hydrogen-powered automobiles. Still, a global trend favoring electric vehicles has led to the shutting down of numerous hydrogen refueling stations, even in the UK. Nevertheless, Shell remains invested in green initiatives. Last year, it initiated the construction of Europe's most expansive 200 megawatt electrolyser plant in the Netherlands to manufacture green hydrogen. While the company did propose establishing a low-carbon hydrogen hub in Louisiana, it didn't make the cut for a share of the $7 billion U.S. federal grants designated for nascent industries.
As Shell proceeds with these changes, Sawan reiterated the corporation's unwavering commitment to its net zero carbon emissions goal by 2050, despite shifting its strategy to achieve this target. This assertion comes after recent internal disputes, wherein Sawan faced criticism from employees over potentially curtailing renewable energy investments. The stock values of Shell and its European counterparts, BP and TotalEnergies (EPA:TTEF)have experienced turbulence, with investors expressing concerns regarding potential returns as these firms scale back on oil and gas production. In contrast, U.S. competitors Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) have strengthened their positions in the fossil fuel domain by purchasing several oil companies.
This article was originally published on Quiver Quantitative