BP to slash 4,000 jobs as the oil price slump takes its toll

Redundancies come as analysts say crude could bottom out at  just $10 a barrel

BP has announced it is cutting 4,000 jobs – including 600 in its North Sea operations – in response to the latest dramatic slump in oil prices.

The oil major insists it is still committed to the North Sea, but told staff around the world of the latest cuts at a series of meetings as Brent crude touched a new 12-year low of  $30.34 a barrel and US crude fell below $30.

The job losses will take total staff numbers in BP’s upstream oil and gas exploration division from 24,000 to below 20,000 by the end of 2017, although it is understood most of the jobs will go this year. The company has around  80,000 staff worldwide. The 600 jobs to go among BP’s staff and contractors in its Aberdeen-based North Sea operations represent a fifth of its 3,000-strong workforce. 

The latest reductions follow the lay-off of 300 BP North Sea workers almost a year ago. According to the trade body Oil & Gas UK, explorers cut more than 5,000 jobs last year in the region.

BP’s president for the North Sea region, Mark Thomas, said there was a “long-term future” for its operations there, with $2bn (£1.4bn) to be invested this year that would sustain many hundreds of jobs in the North Sea business and among its supply chain.  But he added: “In toughening market conditions and given the challenges of operating in this maturing region, we need to take specific steps to ensure our business remains competitive and robust… We are speaking to our staff and agency contractor management and will work with those affected over the coming months.”

The company’s move came as the rout in the oil price  showed no sign of slackening. Brent crude is now at its lowest level since April 2004 as markets continue to wrestle with a combination of Chinese turmoil, a global supply glut and a rising dollar, which makes buying crude more expensive. Just 12 days into 2016, the commodity has fallen almost 20 per cent in price, hammering producers. 

A host of banks have cut their oil forecasts this week, with Standard Chartered the most bearish. “We think prices could fall as low as $10,” it said. 

Analysts at Jefferies said: “The near-term outlook for the oil market is bleak. Opec  is producing flat-out into a market that is oversupplied by over 1 million barrels a day; already decelerating demand could decay further with slowing economic activity; and OECD inventories that are already at record levels are likely to expand through at least the middle of the year.”

On the BP cuts, Deirdre Michie, the chief executive of Oil & Gas UK, said: “Companies are having to take very difficult decisions in what continues to be a challenging time, and we as an industry must be thoughtful and supportive of our colleagues who are being made redundant or facing uncertainty.” 

China’s slowing economy has weighed on oil in recent months. And while demand looks fragile, supply from key producers remains robust. Iraq, the second-biggest producer within Opec, plans to export a record of 3.63 million barrels a day from its southern oil terminals in February, according to the Reuters news agency, citing sources. 

However, Nigeria’s oil minister said a “couple” of Opec  members had requested an emergency meeting, adding that the current market conditions supported the need to convene such a gathering.

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