Shell Cuts North Sea Staff As Oil Prices Rise

Shell UK has announced plans for 250 further job losses in its North Sea operations this year just hours after global oil prices soared on fears surrounding supply security.

Shell (LSE: RDSB.L - news) 's cuts, affecting staff and agency contractors both on and offshore, take UK job losses since last August to 500.

Shell added that shift patterns were also facing changes.

The company said: "The measures are part of a range of initiatives Shell has been pursuing to manage costs and improve the competitive performance of its operations around the world.

"Staff and agency contractors based in Aberdeen and on installations in the North Sea were informed of the plans during a meeting today.

Abu Dhabi-listed TAQA also announced plans to cut about 100 North Sea roles.

Oil prices have plunged by as much as 60% since a peak of $115-per barrel in June last year.

Brent crude is currently trading at almost $59 - up more than 4% in Thursday trading - after Saudi Arabia led air strikes against rebel forces who forced Yemen's president to flee the capital, Sanaa.

The oil price increase was put down to concerns about security of supply, despite the glut of oil in the market which has dominated recent pricing.

The increase reflected Yemen's proximity to key shipping lanes between Europe and the Gulf, traders said.

Kuwait later announced it was boosting security at its oil installations in response to the developments in Yemen.

Oil companies are looking for prices to return to levels of at least $90 but major producing nations have refused to cut output for fear of losing market share.

Commenting on Shell's plans Paul Goodfellow, its upstream vice president for the UK and Ireland (Other OTC: IRLD - news) , said: "The North Sea has been a challenging operating environment for some time.

"Reforms to the fiscal regime announced in the Budget are a step in the right direction, but the industry must redouble its efforts to tackle costs and improve profitability if the North Sea is to continue to attract investment.

"Current market conditions make it even more important that we ensure our business is competitive. Changes are vital if it is to be sustainable.

"They will be implemented without compromising our commitment to the safety of our people and the integrity of our assets."

Shell and rival BP have both cut North Sea investment as they move to save costs.

Industry body Oil and Gas UK has estimated that around 20% of UK production is uneconomic at a $50-per-barrel oil price.