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WORLD: Shell Outsourcing

by Mark TranGuardian (London)
April 28th, 2004

Royal Dutch Shell, the embattled oil giant, said today it will cut up to 2,800 jobs as it relocates its global technology division.

IT operations, now concentrated in the UK, the Netherlands and the US, are to be shifted to India or Malaysia, where Shell already employs about 1,000 people in a technology support centre.

The company, currently under investigation in the UK and the US for overstating its oil reserves, did not disclose where the jobs would be cut, but it employs around 1,000 people in its British IT operations in the north-west and in London. The group expects the cuts to save $850m (475.6m).

Shell said the move was not just a cost-cutting exercise but was designed to improve efficiency and provide better services. The move will hardly boost morale at Shell as it undergoes one of the worst crises in its history.

In recent weeks, its chairman, its head of exploration and its head of finance have all resigned after the company admitted to having overstated its oil reserves.

The company has revised its reserves downward by 3.9bn barrels, or one-fifth of total holdings. According to an internal report, Shell bosses knowingly hid the shortfalls in the company's oil and gas reserves as far back as 2001.

In another blow to the company, an exploratory well drilled by a Royal Dutch Shell unit in the North Sea off the west coast of Norway has failed to find oil or gas, oil officials said today.

The dry well adds to a string of disappointing drills in the past few years on the Norwegian continental shelf, where oil was found in the 1960s. Production from many existing wells is beginning to taper off.

"The sandstone was drilled through to the planned depth, but no hydrocarbons were found at the reservoir level," the Norwegian petroleum directorate said in a statement.

The operator Norske Shell has stopped drilling the well, which lies 68 miles off the coast between Bergen and Haugesund, the directorate said. The partners in the licence are Shell's unit Enterprise Oil, Norway's Norsk Hydro, Germany's RWE Dea and the UK group Paladin Resources.

The well, drilled by the DeepSea Delta rig, was sunk to a total depth of 2,273 metres (7,457 feet) in water 131 metres deep.





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