BP to cut 3,000 more jobs after profits halve

BP IS to cut 3,000 jobs, this time in its downstream division, as it seeks to rebalance the books in the wake of the collapse of the oil price.

In its 2015 full-year results announcement, the company said that its profits had fallen 51% to US$5.9bn, compared with US$12.1bn in 2014. Its Q4 profits dropped 91% from US$2.2bn in 2014 to US$196m in 2015. BP says that the drop was largely caused by the impact of the much lower oil and gas prices on its upstream segment, which in fact posted a US$700m loss in Q4. Oil in Q4 2014 was reaching an average price of US$77/bbl, while gas was making around US$4 per 1m BTU. In Q4 2015, those figures had fallen to US$44/bbl and US$2.27 per 1m BTU respectively.

In January this year, BP said that it would cut 4,000 positions from its upstream exploration and production segment, including 600 job losses in the North Sea, seeking to increase efficiency and save money. The company has now said it will cut a further 3,000 from its downstream segment by the end of 2017.

“We are continuing to move rapidly to adapt and rebalance BP for the changing environment. We’re making good progress in managing and lowering our costs and capital spending, while maintaining safe and reliable operations and continuing disciplined investment into the future of our portfolio,” said CEO Bob Dudley. “Our plans set out a clear course for BP for the medium term and will allow us to deliver growth in the longer term.”

The company has completed a US$10bn divestment programme first announced in 2013 and says it plans to divest a further US$3bn–5bn in assets in 2016. At present, BP expects to maintain its capital expenditure between US$17bn–19bn throughout 2016 and 2017. In 2015, capital expenditure was US18.7bn. CFO Brian Gilvery warned, however, that the situation will be kept under review, and could change if the oil price does not rise.

Analysts expect most major oil companies to post weak Q4 results in the coming weeks. Chevron has already announced a quarterly loss, its first in 13 years, while Shell also warned in a trading update that Q4 profits were down around 50%.