Sir John Browne, the chief executive of BP Amoco said that the vast bulk of the latest job losses would be in the US, which has borne the brunt of the cutbacks implemented so far. The oil giant is setting aside a further $700m to cover the latest redundancies, bringing its total restructuring charges to some $2.7bn. When the merger was announced last August, BP Amoco initially forecast 6,000 job losses among the 99,000-strong workforce and estimated it would achieve $2bn of cost savings by the end of 2000.
Earlier this year the job loss figure was raised to 10,000 and then last month BP Amoco said that it was doubling its cost reduction target to $4bn by 2001
Sir John said yesterday that by the end of July 12,500 employees had left the group while a further 2,000 would be gone by the end of the year. He also disclosed that BP Amoco was now achieving annualised cost savings of $2bn - almost 18 months ahead of schedule.
The latest job cuts came as BP Amoco unveiled much better than expected second quarter profits showing that it is now the most profitable oil company in the world ahead of Exxon-Mobil.
Replacement cost profits in the period from April to June rose 19 per cent to $1.37bn while return on capital employed has increased to 12 per cent - the highest of any of the oil majors. The shares rose 2p to 1225p despite a 2.5 per cent fall in the FTSE-100 Index, of which BP Amoco represents almost 10 per cent.
Merger benefits contributed $550m to profits in the period, more than offsetting the $350m hit BP Amoco took as a result of lower oil and gas prices and sharply lower refining and chemicals margins.
BP Amoco has been buoyed by rising oil prices, with Brent crude now up to $20.50 a barrel. Sir John said that if price stability was to be maintained then it was "critical" that Opec kept its discipline and stuck to the production cuts agreed earlier this year. He declined to give a forecast of whether the increase would be sustained and said he was a "realist rather than an optimist" when it came to oil prices.
Sir John said BP Amoco was on course to complete the takeover of the US and Alaskan oil company Atlantic Richfield by the fourth quarter of the year. BP Amoco is forecasting $1bn of cost savings from this deal but most analysts believe they will be significantly higher.
Rodney Chase, deputy chief executive, said that BP Amoco was in "serious and intense" discussions with Exxon-Mobil about buying out its stake in their European refining and marketing joint venture. Exxon-Mobil was been told that it must sell the stake in return for regulatory approval of its merger from Brussels.Reuse content