Oil giant BP will cut 10,000 jobs as a result of the coronavirus crisis, chief executive Bernard Looney announced today.
Reuters first reported that Looney told employees of the cuts, which account for 15 per cent of BP’s workforce, in a global conference call this morning.
In a company-wide email seen by City A.M., Looney confirmed the job cuts, saying: “We will now begin a process that will see close to 10,000 people leaving BP – most by the end of this year.
“The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritising safe and reliable operations”.
BP added that it did not yet have an accurate breakdown of where the cuts would be made, but said the changes would “significantly impact” its senior levels.
However, about a fifth of the job cuts will take place in the UK, where BP employs 15,000 people, a company spokesman said.
In a statement it said that BP’s 400 or so group leaders would be cut by around a third.
In May it was reported that the firm would cut is 250-strong senior management team in half in its push to become a net-zero emissions firm.
However, Looney warned that the firm might have to go even further next year to reduce its operating costs.
Currently, he said, $8bn of BP’s $22bn operating costs come from its workforce, a figure that he is aiming to reduce by $2.5bn.
BP is also working to reduce its capital expenditure by $3bn this year – 25 per cent of what had been budgeted.
Looney warned that due to the collapse in oil prices, the firm was spending far more than it was making, and said:
“We have to spend less money. We are spending much, much more than we make – I am talking millions of dollars, every day”.
Senior staff will not receive pay rises this year, although junior and mid-rank employees will get them in October.
Although final decisions on cash bonuses will be made next year, BP said it was “very unlikely” anyone would receive one for 2020.
The coronavirus crisis has battered the world’s oil majors, with a near total collapse in demand sending oil prices spiralling down.
Many of BP’s competitors have been forced into sweeping job cuts to cope with the downturn.
Professor David Elmes of Warwick Business School said that the losses at BP were “symptomatic of the wider challenges facing the industry”.
He said: “All firms in the sector will all be looking at how they can cut costs, shift their activities to the lowest cost field, trim investment, and thinking hard about what dividend they can pay.
“BP and the other European-based international companies have already said they will become less focused on oil and gas over time. If this situation continues, there will be intense discussions about what can they do to move faster.”
In March Looney had said that the firm would not make any of its 70,100 staff redundant within the next three months.
However, in his email, he announced that the moratorium on job losses had now expired.
However, when he took over the business in February, he signalled that the wide-ranging restructuring of BP to switch its focus to renewable energy would entail job cuts.
In today’s email, he said: “It was always part of the plan to make bp a leaner, faster-moving and lower carbon company.
“That is how we will deliver on our net zero ambition. And that is how we will seize opportunities throughout the energy transition”.
Union RMT, which represents offshore workers, condemned the cuts, describing them as “catastrophic”.
General secretary Mick Cash said: “Offshore workers will not be made to pay for successive government’s failure to tax and regulate North Sea oil and gas companies in a sustainable manner.
“Policies must be adopted, and quickly to secure a just transition to a net zero carbon economy”.