BP PLC said Tuesday it would slash about 4,000 jobs from its exploration-and-production unit—about one-sixth of the staff in that business—over the next year or so, the latest in a wave of cuts across an industry beset by plummeting oil prices.
BP’s cuts will affect workers in places including Angola, Azerbaijan and the U.S., a spokesman said, where BP has big oil-and-gas production operations. Some 600 of the cuts will come from BP’s operations in the North Sea. The company currently has about 3,000 employees in the North Sea, and 24,000 exploration-and-production employees world-wide, the spokesman said.
BP’s announcement comes after many of its rivals announced similar levels of job cuts in response to oil prices that have fallen by more than two-thirds since mid 2014. U.S. oil was trading just above $31 on Tuesday, brought lower by a Chinese slump in energy demand, a continued world-wide crude glut and a strengthening American dollar.
In the U.S., Chevron said last year it could cut between 6,000 and 7,000 jobs. France’s Total SA ast year said it would cut 2,000 jobs by 2017. Norway’s Statoil AS A said it would get rid of up to 1,500 permanent jobs and 525 consultants this year in a $1.7 billion cost-cutting program. The company had previously cut 1,340 permanent jobs and 995 external consultants since the end of 2013. Royal Dutch Shell PLC said in July it would slash 6,500 jobs, and could make further cuts in the wake of its planned acquisition of BG Group PLC, expected to be completed in February.
Unlike its competitors, BP has been planning a major staff reduction unrelated to the oil price for more than two years. After its 2010 Gulf of Mexico disaster that killed 11 workers and sullied the U.S. coast, BP sold more than $40 billion in assets to pay legal and cleanup costs. Those sales shrunk the company’s operations, but not its head-count—in late 2014, BP said it had more than 84,000 employees. Chief Executive Bob Dudley announced a $1 billion restructuring plan to be implemented last year that would save money partially through staffing cuts.
Overall, BP still has about 80,000 employees, the spokesman said. BP cut about 4,000 last year, the spokesman said. He said the cuts announced Tuesday are in line with the cost-reduction plan and in response to low oil prices. The spokesman said the cuts would include layoffs and eliminating positions through attrition.
Last fall, BP announced a plan to cope with the oil-price crash, intending to shift the company’s operations by 2017 so that its cash flow would cover its spending at $60-a-barrel oil, nearly twice the current price.
Since the price slump, the oil industry has seen some 250,000 layoffs world-wide, according to Houston consultancy Graves & Co.
Santander analyst Jason Kenney said he expects to see the even more layoffs in coming months as companies struggle to cope with falling revenue.
“We need to see significant disinvestment going forward,” he said.
There appears to be little relief in sight for oil companies. Investment banks have sharply cut their price outlooks in recent weeks. Brent crude, the international oil price benchmark, will average $50 a barrel this year, according to 11 banks polled by The Wall Street Journal, down $7 from the previous month’s survey.