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BP to cut 10,000 jobs as virus hits demand for oil
Chief executive Bernard Looney laid the blame squarely at the door of the drop in oil prices and the global collapse in demand for oil owing to the coronavirus pandemic as he told staff; “You are already aware that, beyond the clear human tragedy, there has been widespread economic fallout, along with consequences for our industry and our company.
“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. And as a result, our net debt rose by $6bn in the first quarter.”
An industry reducing costs
The job losses represent about 15% of the oil group’s 70,000 staff worldwide with the jobs due to go by the end of the year. The London-headquartered group has not said how many jobs will be lost in the UK but it is thought the figure could be close to 2,000. BP employs around 15,000 people in the UK with the firm’s office-based workers expected to bear the brunt of the redundancies which will not affect any of its retail staff.
The changes are expected to significantly impact its senior ranks, cutting the number of group leaders by a third with the company saying it will make the senior structure flatter. The CEO emphasised that BP must reinvent itself and emerge from the crisis a “leaner, faster-moving and lower carbon company”.
Looney, who took over as chief executive of 111-year-old BP in February, said: “We will now begin a process that will see close to 10,000 people leaving BP – most by the end of this year. The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritising safe and reliable operations.”
The Brent crude oil price started the year at about $64 (£50) a barrel but plunged as low as $19 in April as the pandemic took hold. It has since recovered to about $35 a barrel but the drop has taken its toll on the industry.
Professor David Elmes, energy expert from Warwick Business School, said; “The job losses at BP are symptomatic of the wider challenges facing the industry.
“Coronavirus has reduced oil demand and the price per barrel has plummeted, but that has happened in a wider context of short-term and long-term decline.”
“All firms in the sector will all be looking at how they can cut costs, shift their activities to the lowest cost field, trim investment, and thinking hard about what dividend they can pay.”