The situation for oil markets is considerably worse than expected, and where oil companies originally held on for a brief downturn, the signs today are that this new low oil price environment is here to stay.
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“Integration of our United Kingdom services will deliver a streamlined and effective business which is created to ensure we remain competitive and sustainable against a challenging industry backdrop”.
A BP spokesperson told Retuers that the company will cut about 600 positions in the North Sea during the next two years, with most of those reductions occurring in 2016.
The job losses amount to around 5% of BP’s total global workforce of 80,000. According to a company spokesman, BP expects its upstream headcount to fall below 20,000 by end of 2016, as part of a $3.5 billion restructuring program.
Adding “We are speaking to our staff and agency contractor management and will work with those affected over the coming months”.
Brent North Sea crude prices tumbled to fresh 12-year lows on Tuesday and have shed more than 15 percent so far this year.
Meanwhile, local MSP Tavish Scott said he was concerned that, in the light of falling oil prices, the industry was cutting highly-qualified jobs too hastily.
For E.ON, the transaction marks the end of a sales process of its North Sea oil and gas business, which it put under review in late 2014.
We rate BP PLC as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed – some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company will reduce its worldwide upstream workforce to less than 20,000, including 600 workers in North Sea and 270 employees in Alaska, as well as 2,000 in Asia-Pacific region.
On the North Sea, “there is a standstill in the new project launches which may create a hole in the pipeline of projects next year”, said Florent Maisonneuve, managing director and co-head of Oil & Gas at AlixPartners in Paris.
“I will be making sure that the task force that I established round about this time past year is focused on doing everything we practically can do to help both individuals who are facing the prospect of redundancy, but also helping the industry in general as it seeks to cope with what are very hard market conditions”.
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Councillor Alastair Cooper said: “This is no surprise given the low oil price, we don’t know how low it will go”.
