In a significant restructuring move, Shell has announced a reduction of approximately 15% in its low-carbon solutions division's workforce and a scaling back of its hydrogen operations, part of CEO Wael Sawan's strategic effort to enhance profitability. These organizational changes underscore Sawan's commitment to driving the company's focus toward higher-margin ventures, maintaining stable oil output, and expanding natural gas production.

Confirming these adjustments, Shell revealed that it plans to cut 200 jobs in 2024, with an additional 130 positions currently under review within the unit, which presently employs roughly 1,300 individuals. Some of these roles will be integrated into other segments of Shell, a company with a workforce of over 90,000 employees.

The company emphasized its commitment to bolstering the delivery of core low-carbon business areas such as transportation and industry within its Low Carbon Solutions (LCS) division, which excludes the renewable power business.

The restructuring in the LCS division, including the job cuts and organizational alterations, was recently communicated to employees during several town hall meetings held by Shell managers, as confirmed by company sources. However, the carbon capture and storage as well as the nature-based solutions businesses within the division are expected to remain unaffected by the current round of cuts.

A primary focus of the restructuring efforts is Shell's hydrogen business. Notably, the company plans to significantly curtail its operations in the hydrogen light mobility sector, which primarily involves the development of technologies for light passenger vehicles. Furthermore, Shell will merge two of its four general manager roles within the hydrogen business.

This shift in focus within the hydrogen sector follows the departure of Oliver Bishop, the former manager of the business, who currently leads BP's global hydrogen mobility business.

While Shell has been a pioneer in supporting hydrogen-fueled cars, recent years have witnessed the closure of several hydrogen refueling stations worldwide, including in Britain, due to increasing consumer preference for electric vehicles.

Despite these strategic adjustments, Shell remains committed to its global hydrogen portfolio, positioning it as a crucial component of the company's endeavors to address both commercial and technical challenges in scaling its Low Carbon Solutions business. Sawan reiterated the company's commitment to its goal of achieving a net zero carbon emission status by 2050, emphasizing a dedicated focus on investments that have the highest potential for generating value and reducing emissions.

The company's strategic realignment reflects the challenges faced by Shell and other European peers, including BP and TotalEnergies, amid concerns among investors regarding the future profitability of these companies as they transition away from traditional oil and gas production. In contrast, U.S. counterparts Exxon Mobil and Chevron have chosen to intensify their focus on fossil fuel production, with recent large-scale acquisitions of oil companies.