Oil giant BP is to cut 600 jobs from its North Sea operations, following a drop in oil prices, it was reported on Tuesday.
The North Sea job cuts represent a fifth of BPs workforce in the region, where it employs 3,000 people. These employees include 1,800 in Aberdeen and 500 offshore. Most of the staff and contractor posts will go this year, with the remainder expected to be lost by the end of 2017. It it expected that workers in Aberdeen, Sullom Voe in Shetland and Grangemouth will be affected by the cut in BP’s headcount.
According to reports, oil prices have slumped to the lowest rate in 12 years and the sustained fall in the oil price shows no signs of abating. The cost of a barrel of Brent crude has dropped to below USD31, compared to a peak of over USD115 in 2014. The decline in oil prices is said to be a result of a glut in supply and slowing demand from emerging markets, such as China in particular.
BP reportedly plans to cut a total of 4,000 jobs from its exploration and production divisions over the next two years, which includes the 600 job losses in its North Sea operations.
Mark Thomas, regional president for BP North Sea, was quoted by the BBC as saying: “We are committed to the North Sea and see a long-term future for our business here.
“For example, in 2016, we are continuing to invest around USD2bn of capital into North Sea projects and a further USD2bn in running our North Sea operations.
“This will sustain many hundreds of jobs both in BP North Sea and our supply chain going forward.
“However, in toughening market conditions and given the well-documented challenges of operating in this maturing region, we need to take specific steps to ensure our business remains competitive and robust.
“An inevitable outcome of this will be an impact on headcount and we expect a reduction of around 600 staff and agency contractor roles by the end of 2017, with the majority of these taking place this year.
“We are speaking to our staff and agency contractor management and will work with those affected over the coming months.”