Royal Dutch Shell Group .com Rotating Header Image

Shell jobs axed as report warns on future for oil market


Wednesday 16 November 2016

Shell is to axe its Glasgow operation with the loss of 380 jobs as a new report warns of a “boom/bust” cycle in the oil industry.

The cuts are in response to the low oil price – which is already hurting the Scottish economy amid thousands of job cuts in North Sea production.

Shell said the decision to close its finance operation in Glasgow, which will take place by 2018, came about as it was taking “difficult choices” in order to remain competitive.

The oil market has suffered from oversupply over the past two years, with the price of a barrel of oil from more than $100 in mid-2014 to less than $30 at the beginning of this year. As a result, companies have dramatically cut investment in new projects.

But a new report from the International Energy Agency (IEA) warns that more money must be invested to avoid a swing back to under-supply in the market.

It says that if new project approvals remain low in 2017 it is “increasingly unlikely that demand … and supply can be matched in the early 2020s without the start of a new boom/bust cycle for the industry.”

Investment peaked at $780bn (£624bn) in 2014, dropping by $200bn (£160.5bn) last year, and is predicted to fall another $140bn (£112bn) this year, the IEA says.

Approval of new conventional crude projects was the lowest since the 1950s, the agency said in its World Energy Outlook report

It takes between three and six years to get new conventional oil fields producing.

Therefore, unless there is a rise in investment, the IEA says there is a risk of a mismatch between supply and demand.

It believes $700bn (£562bn) is needed per year for investments in exploration and production, and a price of $80 per barrel, if supply and demand is to be balanced in 2020.

Currently, Brent crude is trading around $46 per barrel.

OPEC, the cartel made up of the world’s major oil suppliers, gave a similar warning last week. 

Its annual report said: “While the recent oil market environment has been one of oversupply, it is vital that the industry ensures that a lack of investments today does not lead to a shortage of supply in the future.”

Both the IEA and OPEC see demand for oil continuing to grow through to 2040.

The IEA, which advises developed market economies on energy policy, predicts use of natural gas jumping by 50% as nations try to comply with the newly signed Paris Agreement to meet increasing demand for electricity and reduce use of heavily polluting coal.

It acknowledged the challenges to meet the 2C target to limit the rise in global warming were immense and warned the impact on oil would be considerable.

“The fossil-fuel industry cannot afford to ignore the risks that might arise from a sharper transition,” it added.


This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Comments are closed.