One of the North Sea’s biggest employers today announced plans to cut 6,000 jobs from its global workforce as part of a plan to slash almost £600 million of costs in the face of the oil price fall.
Although French energy giant Technip gave no specific figures for job losses in particular markets, the North Sea – where it employs around 1,000 staff out of Aberdeen – will be one of those which is expected to bear the brunt of the cuts.
Technip said it needed to accelerate its existing cost-cutting programme in response to the downturn in the oil and gas market. The Paris-based firm said the restructuring move – which will see it exit some geographic markets altogether – was in anticipation of an “even more challenging environment” ahead.
Chairman and chief executive Thierry Pilenko said the company needed to go as “deep and wide as possible” to reduce costs given the “harsh and prolonged downturn” it faces around the world.
Technip said that the smaller nature of projects in the North Sea meant they were easier for customers to cut investment on.
“The sharp fall in oil prices has had a substantial impact on clients’ behaviour, national and international oil companies alike. New projects continue to be deferred as clients assess their investment priorities in a durably changed oil price environment,” it said in a statement.
It also said there was evidence of “irrational behaviour” from competitors in bidding on some projects which are going ahead.
Pilenko admitted the cost-cutting would have tough consequences for staff across the group which employs some 32,000 permanent staff. He said employees will be informed and employee representatives consulted “in due time on a local basis”.
Technip’s restructuring plan targets savings of €830m (£588m), of which €700m will be delivered in 2016 and the balance in 2017.
The firm’s UK operations provides subsea services including pipe laying, subsea structure construction and installation and inspection, repair and maintenance (IRM) services.
Accounting firm KPMG last month said there were increasing signs of distress in the oil and gas market as the “ripple effect” of cost-cuts begins to spread, and warned that the next six to 12 months will be “critical” for the survival of oilfield services companies and those further down the supply chain.
In recent months, Shell said it planned to reduce the number of staff and agency contractors who support its UK North Sea operations by at least 250 this year, while Abu Dhabi oil company Taqa said it would be cutting about 100 North Sea onshore positions.
In addition, offshore engineer Subsea 7 announced “regrettable” plans to axe 410 jobs in the UK following a downturn in activity triggered by falling prices, while Aberdeen-based dredging specialist X-Subsea fell into administration at the end of April, triggering 26 redundancies.
North Sea explorer Trap Oil has also warned that it could run out of cash this month.