Another 3,000 jobs to go at BP Amoco

Click to follow
The Independent Online
BP AMOCO, Britain's largest company, is cutting an extra 3,000 jobs this year as it accelerates its cost-cutting programme in an attempt to adjust to falling oil prices.

The company, which was created by the merger of British and American oil giants last year, plans to achieve cost savings of $2bn (pounds 1.2bn) within the next 12 months - almost a year ahead of the original schedule.

As a result, 10,000 people will leave BP Amoco's operations around the world this year. One-fifth of all white-collar staff are to be axed. The company will also slash its exploration budget by almost half to $550m as it concentrates on large, low-cost oil fields.

Sir John Browne, BP Amoco chief executive, said the company had assumed that the oil price would average no more than $11 per barrel this year. Yesterday the price of a barrel of Brent crude dipped below $10 for the first time since December.

"We don't believe that anything much below $11 is sustainable for very long because the fundamentals of supply and demand would be disrupted by a lack of investment,'' Mr Browne said. "But it's equally hard to see a rapid rebound of prices from current levels because of the extent of stocks.''

He was speaking as British Petroleum reported a 37 per cent plunge in underlying earnings to $875m in the final quarter of 1998.

Earnings for the full year - the last before the merger - dropped by a third to pounds 4.47bn.

Mr Browne said that BP Amoco also planned to add a further $550m to its pre-tax profits this year from efficiency savings that BP and Amoco had already been planning before the merger.

However, a large chunk of the benefits will be wiped out this year by restructuring charges, which are expected to total around $1.5bn.

The company is currently preparing a new set of three-year targets, which it plans to announce to the City later this year.

BP Amoco shares closed down 16.5p at 840p.