Oil price to cost 124,000 UK jobs by the end of 2016, study warns

Job cuts come as crude prices slump by more than half

330,000 people now depend on UK oil and gas for jobs

(Getty Images)

The UK oil and gas industry will ax 120,000 jobs by the end of the year following the collapse in oil prices, according to a lobby group.

This year, 330,000 jobs will be supported by oil and gas production, down from a peak of 450,000 in 2014, according to the report from Oil & Gas UK.

The numbers include non-oil producing jobs in the wider economy, including hotel staff and taxi drivers.

The estimates demonstrate how much oil companies have tightened their belts in order to weather the collapse in crude prices and the effect of the downturn on the wider economy. Brent, the global benchmark, has tumbled from as high as $115 a barrel two years ago to about $52 a barrel.

“The industry has been spending more than it is earning since the oil-price slump towards the end of 2014,” Deirdre Michie, chief executive officer of Oil & Gas UK, said in a statement.

“To survive, the industry has had no choice but to improve its performance.”

BP said in January it would cut North Sea jobs by 600 over the next two years, while Royal Dutch Shell Plc said on May 25 it was planning 475 job cuts in its UK.

and Ireland exploration and production business, mostly this year.

The job losses have come as the sector has been forced to reduce its capital expenditure, shed assets, cancel or postpone costly development projects and even sometimes cut dividends.

Just this week, Shell said it was cutting its spending plans further to $29 billion for this year from a previous forecast of $30 billion.

The total employment the oil and gas industry can sustainably provide “depends on the level of investment attracted to the basin,” Michie warned. “If investment falls, then so will jobs.”