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.Reuse content