Oil major announces it is to cut around 10,000 jobs globally, as CEO predicts coronavirus crisis will accelerate company's transition towards cleaner energy sources
BP yesterday confirmed it is to cut its workforce by around 15 per cent, leading to an estimated 10,000 jobs as it seeks to adapt to the recent oil price crash and accelerate its transition towards cleaner sources of energy.
Chief executive Bernard Looney told employees in a global conference call that the company is to cut 10,000 jobs from its current 70,100 workforce, with most of the cuts expected to focus on senior office-based positions. Around 2,000 jobs are expected to go in the UK.
Looney also confirmed that the company would be awarding no pay rises to senior staff until March 2021 at the earliest and indicated it was unlikely to pay any cash bonuses this year. He also suggested further cost reductions may be required.
Oil prices have fallen sharply in recent months as demand plummeted in response to coronavirus lockdown measures around the world.
BP has previously said it is planning to cut its $12bn capital spending by 25 per cent this year and is looking to find $2.5bn of cost savings by the end of 2021.
In an email to staff, Looney said the company had been planning significant restructuring following its recent pledge to become a net zero emission organisation, but the coronavirus crisis had accelerated those plans.
"The oil price has plunged well below the level we need to turn a profit," he said in the email, which was seen by several media outlets. "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 [£4.66bn] in the first quarter."
"It was always part of the plan to make BP a leaner, faster-moving and lower carbon company," he added. "Then the COVID-19 pandemic took hold. 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."
Oil prices fell sharply from $66 a barrel at the start of the crisis, reaching a low of under $20 before partially recovering to around $42 a barrel.
However, with the market characterised by considerable oversupply and speculation mounting that demand could be permanently dampened by a shift to home working and reduced numbers of flights analysts are predicting that prices could say relatively low and volatile for the foreseeable future.
Looney recently told the FT that it was possible that the world was now experiencing peak oil demand, and as such fossil fuel companies had to accelerate their transition strategies.
He also told the Guardian that he was "more convinced than ever that [the clean energy transition] is the right thing to do, and we need to crack on with it".
"The pandemic only adds to the challenge that already exists for oil in the medium to long term," he added.
The company also faced criticism from unions over its on-going plans to pay shareholder dividends, even as it cuts jobs.
Jake Molloy, regional officer at the RMT union, told the Guardian the job cuts were a "devastating disaster" for staff.
"It's absolutely galling and appalling that just a few weeks ago we see billions handed out in shareholder dividends, and now they are cutting 10,000 jobs," he said. "Something needs to be done about this. It's a terrible way to treat staff."
He also argued that the government needed to step up efforts to help the industry transition towards cleaner technologies.
His comments were echoed by Deirdre Michie, chief executive of industry group Oil and Gas UK (OGUK), who told the BBC that there was "a serious risk the UK loses the skills it needs not only to meet existing energy demands from domestic resources, but also to meet the UK's climate ambitions".
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