Oil giant BP has confirmed that it is to cut a total of 300 jobs in Aberdeen following a review of its N. Sea operations – which first started 50 years ago.
This figure comprises 200 staff jobs from its Aberdeen office and 100 offshore contractors. The company expects a ‘relatively small’ number of compulsory redundancies.
BP currently employs 3,500 people in the North Sea, with a further 11,000 elsewhere in the UK.
The oil giant announced a major restructuring in December in response to the fall in the world oil price, which has halved in recent months.
Trevor Garlick, regional president for BP North Sea, said: “We are committed to the North Sea and see a long term future for our business here.
“However, given the well-documented challenges of operating in this maturing region and in toughening market conditions, we are taking specific steps to ensure our business remains competitive and robust, and we are aligning with the wider industry.
“Whilst our primary focus will be on improving efficiencies and on simplifying the way we work, an inevitable outcome of this will be an impact on headcount and we expect a reduction of around 200 staff and 100 contractor roles.
“We have spoken to staff and will work with those affected over the coming months.”
Malcolm Webb, Chief Executive of the industry’s London-based trade association, Oil & Gas UK, said: “While we cannot comment on the commercial decisions made by our members <BP> we recognise that a rapidly falling oil price and escalating industry costs have impacted on activity across the North Sea, with companies having to make very difficult decisions in light of this challenging business environment.
- “We believe that urgent action is now needed on three fronts. First the industry must proceed to implement necessary cost reduction and efficiency improvement measures.
- “Second, the Department of Energy must proceed as quickly as possible with the full establishment of the new Oil and Gas Authority, and in particular its office in Aberdeen.
- “And third, the Treasury must radically reduce the tax burden on this mature oil and gas province. Tax rates ranging from 60% and up to 80% are no longer sustainable.”
UK Energy Secretary Ed Davey – who yesterday met oil industry leaders in Aberdeen after the BP announcement – acknowledged that tax issues may need to be examined. He said that there must be no “panicked” response to short-term price fluctuations and insisted the government was “determined to do everything we can” to save jobs.
He added: “The oil and gas industry – in terms of corporate sectors – pays more tax than any other and therefore it’s very important that we think about that both in terms of jobs and in terms of the overall tax take and the future health of the sector.
“We need to make sure that to secure our gas and oil needs in the decades ahead that we’re planning with the sector on tax as well as regulation.
“The threat to jobs has been brought home by the news from BP today. We have great sympathy with all those directly affected.
“BP is a significant investor and employer in the North Sea and the UK Government recognises the importance of the North Sea sector, both in terms of thousands of Scottish jobs it supports and its overall benefit to the whole UK economy.”
See also in Scottish Energy News at: http://goo.gl/hEUysJ
N. Sea operators must cut costs to survive, warns Deloitte
Scottish Energy Minister Fergus Ewing commented: “The UK needs to send a signal that it values the industry as an enormous contributor to Scotland and the UK, not as a giant cash machine for the exchequer when the times are good.
“In order to prevent the premature decommissioning of North Sea oil fields there needs to be a clear signal sent to the operators, many of whom are headquartered in places like Houston and Calgary, that the UK government ‘gets it’.”
UK Chancellor, George Osborne last night said that he will look at new measures to support the North Sea oil and gas industry in the next Budget.
Anne Begg, MP for Aberdeen South – who is also chairman of the Westminster parliament’s all party parliamentary group for offshore oil and gas – insisted it was “time for action, not weasel words”. She said: “This is worrying news for Aberdeen. We need action from government at all levels.