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The British oil and gas industry is set for another round of job cuts, according to Sir Ian Wood, the former chairman of Wood Group, an energy services company. Wood, who is also the author of the influential Wood Review on the future of this industry, said the oil and gas companies located in UK's North Sea region could let go of 45,000 employees in 2016.
He explained that the industry was on average witnessing 150 job redundancies per day and that the 2016 pace of job losses was the same as that in 2015. "We lost 65,000 jobs in the last year. And I don't think the losses have slowed down", Wood said.
This follows a fall in oil prices. While Brent crude oil price declined to an average of $52.35 (£37.05, €46.88) per barrel in 2015, the prices fell to a 12-year low of $27 in January 2016, although it has now recovered to about $40 a barrel. These prices show a sharp decline when compared to the 2014 average price of $99.03 a barrel.
This decline in oil prices has led to a decrease in profits for oil and gas companies, which have tried to slash its costs through job cuts. According to industry group Oil and Gas UK, there were 440,000 employees working in this industry at the end of 2014 and this figure fell to 375,000 in September 2015. Wood now predicts that this number could fall to about 320,000 in 2016.
Wood's predictions also follow the job cut announcements made by companies operating in this industry in the recent past, including BP, Petrofac Shell, Chevron, Talisman Sinopec among others. While BP announced in January 2016 that its North Sea operations would see 600 employees let go, Petrofac, the oil services group, said it would cut up to 160 jobs.
That said, the former chairman believed the industry would recover. "This is not the end of the [North Sea] oil and gas industry," Woods said. He believed the UK Government had to involve itself in helping with the recovery of the industry. He explained that the government had to work with bank and loss-making companies and promise developing new and untapped oil prospects such as "like the west of Shetland" in future, according to The Times.
He also added that the government should introduce stimulus such as tax cuts. However, he concluded that "at $40 oil, further losses of jobs and resources are inevitable."