Oil major BP is to spend $1 billion (£640m) on a restructuring programme which will see thousands of jobs cut across its global oil and gas business by the end of next year following steep falls in the price of oil.
The group said it was also considering deeper cuts to its 2015 budget beyond the $1bn-$2bn reduction announced in October due to the oil slump.
Yesterday Opec said global demand for crude in 2015 is expected to fall to the lowest level in more than a decade and far below current output.
BP head of upstream Lamar McKay said: “Given the position taken by Opec and with oil prices where they are today, we will continue to review this further.”
The bulk of the restructuring costs will go towards staff redundancies, a spokesman said.
BP said a first charge will be taken in the fourth quarter of 2014 as it implements a plan drawn up over the past 18 months to increase efficiency.
“We expect the group to incur about $1bn of non-operating restructuring charges over the next five quarters,” the firm said.
Thousands of BP’s global workforce of about 84,000 are expected to lose their jobs, sources said. The group is in the midst of a cost-cutting drive that saw it sell more than $43bn of assets to cover the expense of the 2010 Gulf of Mexico oil spill and the sector’s rising costs.
The sharp drop in oil prices, which has fallen from about $115 a barrel to about $65 since June, has piled further pressure on BP and its peers as revenues tumble.
McKay said new projects were sanctioned at $80 per barrel, and tested at $60pb. Global oil and gas exploration projects worth more than $150bn are set to be put on hold next year as price falls make them uneconomic.
The news came a day after a report warned up to 35,000 oil and gas industry jobs could go in the next five years. The study – for industry body Oil and Gas UK, skills and safety body Opito and the Department for Business, Innovation and Skills – said jobs could fall from 375,000 to 340,000 by 2019. It also said 12,000 new workers will be needed in the UK sector, which has a £35bn supply chain and creates one in every 80 UK jobs.
There report said a decline in capital spend would cut jobs, but an increase in decommissioning and onshore shale could create new opportunities.
Opec last month decided not to cut output to prop up prices. Saudi Arabia said low prices would help combat US shale oil, which needs relatively high prices to be economic.
Shares in BP closed down 6.3p at 399.6p.
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