Recession: Shell, Chevron Plan to reduce Work Force by 25%

Shell and Chevron have begun entrepreneur-ship valedictory training for some of their staff, as the lingering tough time forced the companies and other International Oil Companies (IOCs) operating in Nigeria to slate about 250 fresh staff for disengagement, New Telegraph has learnt.

ExxonMobil and Chevron, two American companies that had earlier engaged in cost-cutting including downsizing, declared at the weekend humongous losses of over $2 billion in just three months that accounted for the third quarter of 2016.

This newspaper gathered that Shell and Chevron, which had earlier announced the sack of workers, have approved about N50 billion severance packages for some 1,700 in Nigeria out of 25,000 workers slated for sack in their global operations.

Executive Director of the FATE foundation, an entrepreneurial group, Adenike Adeyemi, confirmed to New Telegraph that her foundation was one of the groups engaged in talks with oil companies on provision of Small and Medium Enterprise (SME) skills acquisition for staff who are to be disengaged.

One of the oil majors, she said, is particularly in talks with our foundation on the training and this will commence very soon. “We are progressing with talks with one of the big oil companies,” she told New Telegraph on the sideline of an event in Lagos, adding, “what this means is that although oil is important to our economy, the MSME is so critical to get our economy out of recession.”

Adeyemi stated that the SME landscape shows that it contributes 48.7 per cent to Nigeria’s Gross Domestic Product (GDP), far above the contribution of oil and gas sector. “We also have a large market for SMEs in Nigeria based on our population and all these made it imperative for the government to focus funding and investments in the sector,” she said. The gale of mass sack rocking the industry is far from being over, a source at one of the IOCs added.

“In all, about 250 staff in the non-core areas of our operations is still being pencilled down for right sizing. The training you talked about is part of the global standard; a way of ensuring that they are well placed and engaged in the SMEs after they have left the oil industry,” he said.

Exxon Mobil Corporation reported at the weekend 3Q 2016 earnings of $2.7 billion, down 38 per cent ($1.6 billion) from 3Q 2015. Like other oil and gas companies, low oil prices prompted the company to cut capital expenditures (CAPEX).

In the first three quarters of 2016, Exxon- Mobil’s capital and exploration expenditures were $14.5 billion, down 39 per cent from 2015. Last April, the company lost its Triple A credit rating, something it has held since the Great Depression.

Not surprisingly, the oil company’s upstream earnings declined as well. ExxonMobil earned $620 million in 3Q 2016, down 738 million from 3Q 2015. And U.S. upstream earnings declined by $35 million from 3Q 2015.

Chevron Corporation also reported a drop in quarterly profit at the weekend that still beat expectations, as cost cuts in the company’s U.S. oil production division helped mitigate some of the impact of low crude prices.

The company posted a third-quarter net income of $1.28 billion, or 68 cents per share, compared with $2.04 billion, or $1.09 per share, in the year-ago period. Excluding one-time items, Chevron earned 49 cents per share during the quarter. By that measure, analysts expected earnings of 37 cents per share.

Earnings at Chevron’s upstream arm, which produces oil and natural gas, jumped more than sevenfold as costs in the United States dropped and tax expenses fell. Chevron’s refining arm saw profit drop more than 50 per cent as margins dropped both within and outside the United States. Production fell about 1 per cent to 2.5 million barrels of oil equivalent per day.

Shares of Chevron rose 0.6 per cent to $100.51 in premarket trading. Still, ExxonMobil’s Chief Executive Officer, Rex Tillerson believes the integrated structure of the company is delivering “solid results.” On October 27, Exxon- Mobil, along with its partners, discovered a reservoir off the coast of Nigeria that could hold up to one billion barrels of oil.

Oil workers in Nigeria had, last Wednesday, said that Pan Ocean, Ground Petroleum, among others, were leaving the country following the prevailing economic recession which has led to the sacking of about 3,000 oil workers.

“It is painful to say as I address you, Chevron has wound up in the East and their offices closed. A total of 1,500 workers were sacked without their entitlements and nobody is saying anything. As we speak, many companies have left and many others are winding up to go.

“Many oil companies are winding up, including ExxonMobil, Pan Ocean, Sapiem Ground Petroleum, and Hercules Offshore Nigeria Limited. About 3,000 workers had already been sacked by the various oil companies,” President of Nigeria Union of Petroleum and Natural Gas workers (NUPENG), Igwe Achese said.


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