BP jobs cut after oil price collapse

BP is cutting thousands of jobs, accelerating plans to reshape the company as the coronavirus pandemic crushes oil prices.

BP CEO Bernard Looney. Picture: AFP

Oil major BP is cutting thousands of jobs, accelerating plans to reshape the company after the coronavirus pandemic’s crushing impact on oil prices.

The move by the major is one of the first and most drastic from the oil industry, which is expected to shed staff after crude prices hit their lowest level in decades in April, amid pandemic-driven stay-at-home policies that parked vehicles and curbed economic activity.

BP plans to cut nearly 10,000 jobs, or 14 per cent of its workforce, and freeze pay increases for senior managers as it seeks to strengthen its finances.

The job cuts come as new chief executive Bernard Looney responds to the pandemic’s devastating effect on oil demand and coincides with his attempts to reshape the British oil giant for a low-carbon future.

Mr Looney, who took the helm in February, had been crafting a reorganisation plan that had now been “accelerated and amplified” by the need to respond to market conditions and reduce costs, BP said.

“It was always part of the plan to make BP a leaner, faster-moving and lower-carbon company,” Mr Looney said.

“Then the COVID-19 pandemic took hold. The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make — I am talking millions of dollars, every day.”

BP, with a workforce of around 70,000, said the cuts would help to drive down its operating costs by $US2.5bn ($3.5bn) by the end of 2021. The cost-cutting plan might have to go even further, Mr Looney said.

The move follows Chevron’s plans to reduce its 44,679 workforce by as much as 15 per cent. “Most of the workforce reductions will take place this year,” said Chevron.

Shell said in April that it would look at resizing parts of its organisation, ideally through voluntary redundancies.

Schlumberger, the world’s largest oilfield services company by revenue, said it cut 1500 jobs in North America in the first quarter. Last month, its rival Halliburton cut about 1000 jobs at its Houston headquarters.

“I don’t think there’s ever been an oil price downturn without a significant job reduction, and therefore we should expect more of it across other companies,” said Bernstein analyst Oswald Clint. For BP in particular, job cuts were inevitable, given the restructuring announced in February and its cost-cutting plans, Mr Clint added.

The oil industry’s history of boom-and-bust cycles is often reflected in staffing levels, but the pandemic has led to even more drastic measures from some, with companies including Shell and Equinor cutting their dividends.