BP HAS announced hundreds of job losses in its North Sea sector as concern grows about the plunging oil price. It expects to lose 200 onshore staff plus 100 contractors following its review of North Sea operations.
Trade unions described the losses as a “devastating blow” and warned there were more to come. Scotland’s energy minister, Fergus Ewing, warned the country was facing “the most serious jobs situation … in living memory”.
The plummeting oil price, which has dipped below the $50-a-barrel mark this week, saw BP announce a major restructuring exercise last month.
Yesterday, the outcome of that came to light when it was revealed that staff at BP’s North Sea headquarters in Aberdeen had been briefed about the redundancies.
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BP currently employs 3,500 people in its North Sea sector, with a further 11,000 elsewhere in the UK.
“Toughening market conditions” were blamed for the job losses in a statement issued by Trevor Garlick, regional president for BP North Sea.
It is expected that most of the cuts will be in onshore positions and the company is hopeful that there will be a relatively small number of compulsory redundancies.
The announcement was further evidence of the harsh economic implications for Scotland’s oil and gas industry caused by the dramatic drop in price.
UK energy minister Ed Davey was in Aberdeen yesterday as pressure mounted on the UK government to issue tax breaks for the industry.
In Edinburgh, First Minister Nicola Sturgeon was questioned on the Scottish Government’s response to the crisis.
Announcing the job cuts, Mr Garlick said: “We are committed to the North Sea and see a long-term future for our business here. However, given the well-documented challenges of operating in this maturing region and in toughening market conditions, we are taking specific steps to ensure our business remains competitive and robust, and we are aligning with the wider industry.
“An inevitable outcome of this will be an impact on headcount and we expect a reduction of around 200 staff and 100 contractor roles. We have spoken to staff and will work with those affected over the coming months.”
Mick Cash, general secretary of the Rail, Maritime and Transport (RMT) union, described the redundancies as a “devastating blow to hundreds of workers in the UK energy industry”.
As Mr Ewing demanded urgent changes to the UK tax regime, Mr Davey, his UK counterpart, signalled that action could be taken in the Chancellor’s Budget.
“We may be able to have a little help for the North Sea,” Mr Davey said. He also claimed that the drop in oil prices would have left Scotland in a “frankly dire” financial situation if the country had voted for independence last year.
But Mr Ewing called on the UK government to act before George Osborne’s Budget in March.
“It is clear to me that the UK government has accepted it must act on tax. My question is why wait in respect of the supplementary [tax] charge until March?” he said.
“The supplementary charge was hiked up by 12 per cent precisely because oil prices were relatively high; now they are shockingly low, surely swift action is required.”
Mr Ewing added: “I think this is the most serious jobs situation Scotland has faced in living memory.”
At Holyrood, Ms Sturgeon was challenged by Labour, the Conservatives and the Liberal Democrats on the impact of the falling oil price.
The First Minister said that she had announced a jobs taskforce on Wednesday to look at the issue.
She said: “It’s because there is a really serious concern that yesterday I established a jobs taskforce, to work to maintain employment levels in the North Sea, to give practical assistance to those who are faced with prospect of redundancy and to give a guarantee to every apprentice working in the oil and gas sector of continuing employment or training.”
But Labour’s deputy leader, Kezia Dugdale, accused the First Minister of failing to act quickly enough when prices started to tumble. She argued that the SNP’s commitment to full fiscal autonomy and ending the Barnett Formula, which determines Scotland’s block grant, would leave the country exposed to fluctuations in the oil price.
Ms Dugdale said: “The SNP can’t bring themselves to admit that the oil crisis is also a huge threat to the money we have in Scotland to spend on our schools, hospitals and pensions. The Governor of the Bank of England put it best when he said being part of the UK protects our economy from the worst impacts of the oil crisis.
“At a time when the global oil price is plummeting, where is the sense in trading the stability of Barnett and higher public spending for the instability of volatile oil prices and the big spending cuts that would be needed?”
Conservative leader Ruth Davidson said Scottish Government oil and gas bulletins, which predicted tax revenues from the North Sea, had been used by ministers before the independence referendum to predict a second boom for the industry.
“We all wish that was true but it is not, and anyone who questioned it was shouted down,” she said.
Ms Sturgeon responded by accusing the UK parties of decades of mismanagement of North Sea oil. And last night she wrote to David Cameron urging the Prime Minister to take immediate action to protect the oil and gas sector.
Ms Sturgeon’s letter said Mr Cameron should offer an investment allowance to provide support for fields that cost more to develop, reverse the supplementary charge increase implemented by the UK government in 2011 and introduce an exploration tax credit to help increase levels of exploration and sustain future production.
Last night, Scottish Labour leader Jim Murphy called on the Prime Minister and Chancellor to meet a delegation from Aberdeen to discuss the ongoing crisis in the industry.
Meanwhile, energy company Total has begun production at a North Sea site which could supply the equivalent of 40,000 barrels of oil per day.
Bosses said the second phase of the West Franklin field, about 150 miles east of Aberdeen, had “significant reserves” and promised new “exploration opportunities”.
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