Shell is to cut hundreds of jobs from its oil and gas exploration operation in the latest move by the chief executive, Wael Sawan, to slash up to $3bn (£2.3bn) in costs by the end of next year.

The energy company is to cut about a fifth of its workforce in two subdivisions of its oil and gas business responsible for exploration strategy and developing its oil and gas finds.

The cuts, which were first reported by Reuters, are understood to be subject to consultation with employees in offices around the world. However, offices in Houston and The Hague are expected to be affected most, with a lesser impact on its UK operations.

“Shell aims to create more value with less emissions by focusing on performance, discipline and simplification across the business,” a spokesperson for the company said.

“That includes delivering structural operating cost reductions of $2bn-$3bn by the end of 2025, as announced at our capital markets day event in June 2023. Achieving those reductions will require portfolio high grading, new efficiencies and a leaner overall organisation.”

The operations subject to the cuts are part of Shell’s oil and gas production division, known as upstream, which accounted for more than a third of the company’s $28bn in adjusted profits last year.

Despite the cuts, Shell expects to continue to grow its gas production over the coming years, in the face of warnings from climate experts that new oil and gas projects are not compatible with limiting global heating to within 2C of pre-industrial levels.

Earlier this year, the company confirmed plans to cut hundreds of jobs from its low-carbon solutions division, as part of the cost-cutting campaign spearheaded by Sawan shortly after he stepped into the top job.

The plans provoked outrage from climate campaigners and Shell’s own employees, with two members of staff writing a rare open letter urging Sawan not to scale back investments in renewable energy.

Since Sawan replaced Ben van Beurden as chief executive in January 2023, he has abandoned plans to cut oil production and instituted the cost-cutting programme to increase the oil and gas conglomerate’s profits.

The company, which reported $40bn of operating expenses last year, has already cut jobs in areas including its chemicals and wind business and centralised functions such as legal and communications teams.

Earlier this month, Sawan said he had so far made $1.7bn of cost savings across the business and would continue to “simplify the way the organisation works”.

Over the last year, Shell’s market value has increased by 13% to $170bn.