British energy giant BP PLC on Tuesday said that it is to axe more than 4,000 jobs worldwide over the next two years in response to collapsing oil prices.
The firm said in a statement that it would “reduce BP upstream staff globally from 24,000 to somewhere below 20,000 by year-end 2017.”
The cutbacks are to include 600 job losses to North Sea activities.
London-listed BP had already slashed 4,000 jobs last year as it prepared for a prolonged period of low prices.
Brent North Sea crude prices tumbled to fresh 12-year lows on Tuesday and have shed more than 15 percent so far this year.
The oil market plunged by 35 percent last year, its third consecutive annual decline, plagued by chronic oversupply.
“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,” said Mark Thomas, regional president for BP North Sea.
“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,” Thomas said.
Oil dived close to US$30 per barrel on Tuesday on global oversupply, as OPEC member Nigeria called for an emergency meeting to address collapsing prices that have ravaged revenues and hurt the profits of energy majors.
However, BP said on Tuesday that it is “committed to the North Sea.”
The group said it would invest about US$2 billion of capital into North Sea projects this year.
“This will sustain many hundreds of supply chain contractor jobs going forward,” the company added.
British production of oil and gas rose last year for the first time in 15 years, but might struggle to maintain the performance amid low energy prices.
Output is expected to have risen by as much as 8 percent last year after a strong first 10 months, industry body Oil and Gas UK said last week.
Meanwhile, BP profits collapsed in the third quarter of last year as oil prices halved on the back of the stubborn global supply glut.
That forced the British firm to scale back investment and sell more assets after it was ravaged by the catastrophic 2010 Gulf of Mexico oil spill.
David Elmes, a professor at Warwick Business School, said the news was a reflection that energy prices would remain at low levels for some time.
“BP’s announcement of job cuts is sad news for the staff and communities involved, but [they] are a reflection that world prices for oil and gas look set to be lower for longer,” Elmes said.
“World prices have fallen in the past, but recovered soon after,” he said. “The current drop in prices started more than a year ago and prices are still falling.”
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