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7/30/15

Oil Price: Shell plans for 'prolonged downturn' in oil prices (will layoff 6,500 workers) - by Holly Ellyatt

Royal Dutch Shell warned on Thursday that lower oil prices could continue for several years, and said it was planning for a prolonged downturn.

It comes as the Anglo–Dutch multinational reported that earnings in the second quarter, on a current cost of supplies (CCS) basis, came in at $3.4 billion - down from $5.1 billion for the same quarter a year ago. CCS is a way of reporting income that takes into account changes in expenses over the period.

hell also revealed plans to further reduce 2015 capital expenditure (capex) to $30 billion, down by 20 percent from a year ago on the back of a downturn in oil prices, and said it planned to cut 6,500 jobs over the year.

CEO Ben van Beurden said that the company was successfully "reducing our capital spending and operating costs, and delivering a competitive performance in today's oil market downturn."

"We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery.

Note EU-Digest : Royal Dutch Shell said on Thursday that its profit fell sharply in the second quarter as a strong performance in marketing and refining failed to offset the brunt of lower oil and gas prices.

The oil giant also said it would cut its capital investment and eliminate 6,500 jobs as the drop in oil and gas prices squeezes its vast global exploration and production operations.

The company, based in The Hague, said earnings adjusted for inventory changes and excluding one-time items were $3.8 billion, compared with $6.1 billion in the same period in 2014.

Ben van Beurden, the company’s chief executive, justified Shell’s plans for exploratory drilling in Arctic waters off Alaska this summer, despite strong opposition from environmental groups, citing the potential to catapult company reserves. 

He said that the oil field “has the potential to be multiple times larger than the largest prospects in the U.S. Gulf of Mexico, so it’s huge.”

Read more: Shell plans for 'prolonged downturn' in oil prices

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