BP plans to cut at least 4,000 staff and contractor jobs in its
upstream division this year, as it eyes further cost savings in the
lower oil price environment.
"Overall, at a segment level we are
planning an upstream organisation with a workforce of below 20,000
people by the end of 2016," BP upstream chief executive Lamar McKay told
staff today. "I cannot say how far below 20,000 since the environment
continues to change and weaken."
In the UK North Sea upstream
business segment, where the company employs about 3,000 people including
contractors, BP will cut 600 jobs in 2016-17, with the majority of
redundancies taking place this year. BP's upstream business in the UK
will be down to 2,000 people including contractors at the end of 2017,
as some positions could be eliminated naturally as certain projects are
completed.
"In 2016, we are continuing to invest around $2bn of
capital into North Sea projects and a further $2bn in running our North
Sea operations," BP North Sea regional president Mark Thomas said.
BP so far has not provided any detail about planned job cuts in other regions.
McKay
said that globally the company's upstream unit production costs have
already been brought down by 20pc since BP outlined its "simplification
and efficiency agenda" in 2014.
Oversupply in the market means "we
expect prices will remain lower for even longer than we originally
envisaged at the beginning of last year," McKay said. He also confirmed
BP will "rephase and refocus activity where appropriate" to balance the
books.
McKay said upstream executives will begin to share details
of a longer-term plan for BP's upstream operations "during the first
half of 2016".
BP said in October — when detailing its strategy for the next few years — that it was targeting 2017 operating and overhead costs to be $6bn lower than in 2014.
(Argus Media)