Royal Dutch Shell is cutting 10,000 jobs worldwide on the back of an 87 per cent plunge in annual net profits.

Slumping oil prices are bringing the fossil fuel giant to its knees, reporting profit after tax of $US1.94 billion ($2.7 billion) for 2015, compared with almost $US15 billion ($20.9 billion) the previous year.

Shell has issued a statement detailing its lowest annual profit in at least 13 years.

Shell CEO Ben van Beurden said warning of the cuts was given last month during the takeover of rival, BG Group.

“As we have previously indicated, [the changes] will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies,” he said in a statement on Thursday.

Shell and BG are in favour of the merger, which Mr van Beurden said should be completed in a “matter of weeks”.

“We are making substantial changes in the company ... and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices,” Mr van Beurden said.

“In 2015, we significantly curtailed spending by reducing the number of new investment decisions and designing lower-cost development solutions.”