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Shell Shuffles Management to Boost Performance

Royal Dutch Shell plc's incoming chief executive Wednesday announced a restructuring intended to streamline operations, cut overhead and speed decision-making. The changes are expected to affect thousands of the company's 102,000 employees. The move follows project delays and cost overruns that have angered investors.

Shell's upstream activities are currently managed in three separate organizations -- Exploration & Production, Gas & Power and Oil Sands. Upstream will now consist of two businesses: Upstream Americas, covering North and South America; and Upstream International, covering the rest of the world. Marvin Odum, currently executive vice president for EP Americas, will become director for Upstream Americas. Malcolm Brinded, currently executive director of Exploration & Production, will become executive director of Upstream International.

On Tuesday Shell announced the resignation of Linda Cook, who had been head of the company's Gas & Power unit (see Daily GPI, May 27).

The changes will be effective July 1. Peter Voser, who takes over from Jeroen van der Veer as CEO on that date, said, "This new structure will increase accountability in the company, and improve Shell's performance on delivering new projects and developing new technologies. These changes will increase our focus, accelerate our plans to reduce complexity, corporate overheads and costs, and result in faster decision-making and delivery."

There will also be changes in Shell's Downstream unit. In addition to the Refining, Marketing and Chemicals businesses, the Downstream portfolio will be expanded to include Trading and Alternative Energy, excluding Wind, which will be part of Upstream. Downstream will continue to be led by Mark Williams as director.

A new business -- Projects & Technology -- will combine all major project delivery, technical services and technology capability covering both upstream and downstream. It will also oversee safety and environment performance. Matthias Bichsel, who is currently executive vice president for Exploration & Production Technology, will be the director of this business.

Over the last 52 weeks Shell's shares have traded as low as $37.16 and as high as $85.43 on the New York Stock Exchange. Wednesday's close was $52.23, down $1.39.

Earlier this month shareholders rejected senior executive pay packages on the basis of unmet performance targets (see Daily GPI, May 20).

"We have made good progress on simplification and improving efficiency in recent years, but the competition is not standing still, and neither is Shell," said current CEO van der Veer.

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