Shell UK is looking to cut the cost of a major contract, currently carried out by around 1,000 workers.
The company said yesterday it would re-tender its main offshore maintenance, modification and projects deal in the near future.
The contract, which started in 2002, covers all Shell-operated assets in the central North Sea plus the Brent field in the northern North Sea. The work is carried out at the moment by Sigma 3, whose members are Wood Group, AMEC and PSN.
The contract is due to finish at the end of next year, but a spokeswoman for Shell said the new deal would “most probably” start before then. John Gallagher, Shell’s senior upstream international vice-president for the UK, said: “We will continue to make significant investment in the UK sector of the North Sea over the next couple of years and we need to do this as effectively as possible.
“We are looking for further efficiencies in our business that will be crucial to improving our competitive position and sustaining our business here in the UK.”
Earlier this month, Shell said it would cut a further 1,000 jobs worldwide this year after reporting a 69% slide in annual profits to £6.1billion. It also reported a 75% drop in fourth-quarter earnings, to £738million, after pressure on margins in refining offset a year-on-year increase in oil prices.
Shell has cut 5,000 jobs globally in the past year and said it would shed 1,000 in 2010, mainly in downstream and corporate functions, including refining and forecourt sales, to slash costs and make it more competitive against rivals such as BP.
Its business in Aberdeen, where it employs about 1,800, is the hub of its UK upstream – exploration and production – operations. In 2008, Shell announced a local initiative in the city to “right-size” the organisation following the divestment of some late-life assets and to become more competitive.
About 250 people working in or out of the city received redundancy notices just before last Christmas.
BP has moved ahead of Shell after chief executive Tony Hayward stripped costs out of the group and boosted its refining performance.
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