BP cuts 4000 upstream jobs

BP is cutting 4,000 jobs in its global exploration and production business, including 600 from North Sea operations, in the wake of low oil prices.

The cuts were announced during a staff meeting at the oil-major’s Aberdeen office today, and will be completed by the end of 2017. Worldwide, the company will reduce staff numbers from 24,000 to below 20,000.

Oil prices have been hit by a combination of oversupply, a cooling in demand and a strong US dollar. Today, the price for benchmark Brent Crude fell below US$31/bbl – a low point last seen in 2004.

High cost regions, including older and unconventional fields, are uncompetitive at such low prices. Since prices began slipping from above US$110/bbl in mid-2014, companies in the oil sector have been forced to slash expenditure including reducing headcounts. Close to 250,000 jobs were lost in the oil and gas industry by the close of last year, according to estimates from Swift Worldwide Resources.

“Given the well-documented challenges of operating in this maturing region and in toughening market conditions, we need to take specific steps to ensure our business remains competitive and robust,” Mark Thomas, regional president for BP North Sea told staff.

“We expect a reduction of around 600 staff and agency contractor roles by the end of 2017, with the majority of these taking place this year,” he said. 'We are speaking to our staff and agency contractor management and will work with those affected over the coming months.”

Thomas added that BP remains committed to the long-term future of its business in the North Sea and plans to invest US$2bn of capital in the region and a further US$2bn for operations in 2016.

The impact of the low oil price has been felt across the supply chain, with oil services contractor Petrofac announcing yesterday that it is looking to cut 160 jobs across its operations as part of a cost-cutting restructuring plan.

In a piece written for The Chemical Engineer yesterday, Stan Higgins, CEO of the North East Process Industry Cluster, warned that if low oil prices persist, the impact on supply chains will be devastating if not terminal. BP CEO Bob Dudley predicted in an interview with the BBC at the beginning of the year that low oil prices could persist “for a couple of years”, while analysts at Morgan Stanley warned yesterday that prices could continue slipping to US$20/bbl in the coming months.