BP to cut hundreds of UK and US jobs as oil prices plunge

BP is expected to tell staff later today (15 January) about a massive round of job cuts after a 60% plunge in oil prices continues to weigh heavily on North Sea oil operations.

According to IBTimes UK sources, BP will tell its 4,000 staff in the North Sea about how the group plans to remain competitive, amid oil prices hitting six year lows as US crude hovers at $48.06 per barrel (bbl) barrel.

In stark contrast to current figures, back in 2013 and 2012 oil prices averaged $100/bbl.

As well as redundancies, BP is expected to reduce pay for contractors during the announcement at the group's North Sea headquarters in Aberdeen.

BP declined to comment on the report and whether an official release was pegged for today.

On 10 December, BP announced a $1bn restructuring programme over the coming year, which is expected to result in the loss of hundreds of jobs across its UK and US operations.

Amid tumbling oil prices and in the wake of the costly Deepwater disaster, the bulk of the costs will go on redundancy payments. The job cuts will affect oil exploration and production, refining and trading and administration.

The first segment of the charge will be taken in the fourth quarter of this year.

"The fall in oil prices has added to the importance of making the organisation more efficient and the right size for the smaller portfolio we now have," said a BP spokesman at the time.

BP employs 15,000 across the UK and 84,000 in total across the world.

BP will be the latest in a line of North Sea operators to axe jobs to tackle the reduction in profitability following the crash in oil prices.

Shell axed 250 jobs last August and announced this month that it was ditching a $6.4bn energy project in the Middle East because it was no longer commercial.

Chevron pared back 225 positions in July 2014.

At the end of 2014, Brindex, an independent association of energy explorers warned that the UK energy industry is "close to collapse" because the majority of new projects are no longer profitable with oil prices below $60/bbl.

Brindex chairman Robin Allen, who is also director of Premier Oil, said oil companies are already cutting back on staff and costs.

"It's almost impossible to make money at these oil prices. It's a huge crisis," he said.

"This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs wherever possible, and that's painful for our staff, painful for companies and painful for the country.

"It's close to collapse. In terms of new investments - there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone."

Concerns have grown over how this would effect the Scottish economy. According to recent estimates, the oil price tumble could hit the Scottish GDP with £6bn in losses.

"The recent drop in the price of a barrel of crude oil, combined with the mismanagement of oil and gas fiscal policy by the UK government, and other challenges facing the industry, pose a threat to a number of jobs," said Nicola Sturgeon, Scotland's first minister.

"The North Sea has made an enormous contribution to the Scottish and UK economies over the last 40 years. It is now vital, in order to prolong the life of the industry beyond 2050 and maximise economic benefits, that the UK government maintains the momentum for fiscal and regulatory change in the oil and gas sector."