BP to cut several thousand jobs next year

It is the latest response by a major oil and gas company to the sharp decline in the price of crude, which has fallen 40 per cent since mid-June.

BP, whose share price has fallen 24 per cent since June, also said it would reduce capital expenditure further as part of its strategy for 2015. It had already announced a cut of $1bn-$2bn across the group for next year.

The price of crude, which fell below $65 a barrel on Wednesday — a five-year low — has been driven downwards by surging supplies of US shale oil combined with weakening global demand.

The price plunged last month after Opec, the producers’ cartel, decided not to cut output. The bearish outlook was compounded on Wednesday when Opec warned that demand for the oil it produces would hit a 12-year low next year.

It cut its forecast for how much crude it will need to provide in 2015 by 300,000 barrels a day to 28.9m b/d. That is about 1.15m b/d less than what the group produced last month.

BP, which was updating investors on Wednesday on its plans for the upstream and downstream businesses, said in a statement that as part of its wider cost-cutting programme, it expected to incur non-operating restructuring charges of about $1bn in total over the next five quarters, including the current quarter. It said it would set out more details in forthcoming quarterly results.

"We have already been working very hard over these past 18 months or so to right-size our organisation as a result of completing more than $43bn of divestments. We are clearly a more focused business now and, without diverting our attention from safety and reliability, our goal is to make BP even stronger and more competitive,” said Bob Dudley, chief executive.

"The simplification work we have already done is serving us well as we face the tougher external environment. We continue to seek opportunities to eliminate duplication and stop unnecessary activity that is not fully aligned with the group’s strategy.”

BP is accelerating plans to reduce its workforce. It is looking at its non-operations staff, including back-office employees, who have been kept on as the company has shed production assets in its portfolio.

The company has 84,000 employees worldwide, and several thousand jobs are expected to disappear as it carries through some 60 different programmes to "simplify” the business.

"This is a bottoms-up approach,” said a BP spokesman. "It is an accumulation of a series of different processes.”

Fifteen thousand of its staff are employed in the UK, at Sunbury-on-Thames, Aberdeen and head office in London. Many work in Houston in the US and several thousand in Azerbaijan, where it is a big producer in a venture with Azeri state energy firm Socar.

 

(FT)