SCOTLAND’S beleaguered North Sea oil and gas industry has suffered its darkest day of the current crisis as energy giant BP announced plans to axe 600 jobs.
The news was branded a “hammer blow” for the industry which has suffered tens of thousands of layoffs over the past year as the global oil price continues to plummet. It came just a day after another oil firm, Petrofac, axed 160 jobs – with fears that other operators will announce more redundancies this week.
BP’s statement yesterday marked the biggest single announcement of North Sea job losses since the industry was gripped by the downturn.
The company said it has taken the decision because of “toughening conditions”, with most of the posts expected to be shed from its current workforce of 3,000 in Aberdeen this year. Some 4,000 jobs are being shed globally by the firm.
Last night, oil fell below $30 per barrel for the first time since 2003.
First Minister Nicola Sturgeon admitted the industry was in “crisis” and pledged to do “everything practical” to help the workers facing redundancy through a North Sea industry task force.
She said: “For anybody who is faced with losing their job that, of course, is a crisis and for any company that is faced with making redundancies then obviously that is the case.”
Mark Thomas, regional president for BP North Sea, said yesterday the firm is committed to the North Sea and sees a “long-term future” for the business there.
But he added: “Given the well-documented challenges of operating in this maturing region and in toughening market conditions, we need to take specific steps to ensure our business remains competitive and robust.
“An inevitable outcome of this will be an impact on headcount and we expect a reduction of around 600 staff and agency contractor roles by the end of 2017, with the majority of these taking place this year.”
Talks have now opened with staff and contract workers about the likely impact.
More than 65,000 jobs have been lost over the past year in the North Sea industry following the collapse of the global oil price which has plummeted to around $30 from around $110 last summer.
Market analysts at banking giant Morgan Stanley yesterday warned that the global price could fall further still, to as low as $20 a barrel.
Labour MSP for North East Scotland Lewis Macdonald said: “This is another blow for Scotland’s oil industry. BP are one of the oldest and most important companies operating in the North Sea and while they will still maintain their presence a cut of 20 per cent from their workforce is hugely significant.”
The impact of the plummeting oil price is already damaging Scotland’s economy, with the Fraser of Allander Institute reporting a slowdown in growth, largely as a result of the what is happening in the North-east.
Ms Sturgeon said it is a “very difficult time” for people working in the North Sea.
“We will be engaging closely with BP to understand in more detail the announcement they have made,” she added.
The world oil price collapse has been prompted by petroleum powerhouse Saudi Arabia increasing its production levels to compete with the emergence of the fracking industry in North America.
Energy minister Fergus Ewing said: “A key role for government will be to ensure that the fiscal regime is stable, predictable and that headline tax rates in the UK Continental Shelf remain internationally competitive.”
Jake Molloy of the RMT union said BP’s announcement was the latest blow in a “never-ending flow” of bad news. He added: “We anticipated that there would be reductions, but the sheer scale of this is devastating news.”
The decision by an energy giant such as BP to make such drastic reductions may prompt some small operators to pull out, he added.
“It’s really desperate and if ever there was a time we needed hands-on management and government intervention from Westminster, then now more than ever is that time.
“We’re at a tipping point and I don’t think the government are being open and honest about the seriousness of the situation.”
The UK government insisted that support worth £1.3 billion was made available to the sector in the Chancellor’s Autumn Statement in November, including reducing headline tax rates and introducing a new investment allowance.
Scottish Secretary David Mundell said: “We can’t control world oil markets, but in a climate of low and falling prices, it is essential that, alongside supporting the oil industry, we also work to diversify the economies of Aberdeen and other oil-dependent communities to ensure their long-term success, while continuing to engage with the industry to maximise its future potential.”