Oil com­pa­nies ex­pected to slash more jobs

Financial Mirror (Cyprus) - - FRONT PAGE -

One un­in­tended con­se­quence of the rapid drop in oil prices is that com­pany man­age­ments in the sec­tor des­per­ately need to cut costs. Lay­offs are usu­ally a means to lower ex­penses, and oil in­dus­try ex­ec­u­tives mean to do just that. The pound­ing that in­dus­try work­ers have taken is not nearly over.

In the sixth an­nual out­look on the oil and en­ergy in­dus­try from DNV GL, a safety man­age­ment firm, sur­vey re­spon­dents fo­cused pri­mar­ily on cost cuts.

New re­search from DNV GL has re­vealed that cost man­age­ment has be­come an even higher pri­or­ity for se­nior oil and gas pro­fes­sion­als in the year ahead, as 73% pre­pare their com­pany for a sus­tained pe­riod of low oil prices.

The top three mea su re s pri­ori­tised to im­pose stricter cost con­trol are: tougher de­ci­sions on capex, head­count re­duc­tions and in­creas­ing pres­sure on the sup­ply chain.

In the­ory, the drop in cap­i­tal ex­pen­di­tures means an even­tual drop in pro­duc­tion as the search for new de­posits and en­hance­ment of cur­rent de­posit pro­duc­tion un­der­mine sup­ply. Higher oil prices, well into the fu­ture, may be the re­sult.

How­ever, 73% of sur­vey re­spon­dents said that they were pre­par­ing their com­pany for a sus­tained pe­riod of low oil prices, and more than four in ten (42%) be­lieved that oil prices would not in­crease in 2016.

In other words, prices below $30 a bar­rel will con­tinue. And the re­ac­tion: “Our sur­vey shows that cost-ef­fi­ciency ini­tia­tives will con­tinue well into 2016. Nearly nine out of ten re­spon­dents (88%) said that cost re­duc­tion would be top, or a high pri­or­ity, for them in 2016. This is up from 85% last year. Share­holder pres­sure is in­creas­ing the ur­gency of cuts: 93% of pub­licly-listed com­pa­nies said that re­duc­ing costs would be top or high pri­or­ity for them this year, com­pared to 85% of pri­vately-held com­pa­nies and 77% of state-owned com­pa­nies.”

Oil gi­ants Sch­lum­berger Ltd. (NYSE: SLB) and Exxon Mo­bil Corp. (NYSE: XOM) al­ready have cut staff. Smaller oil pro­duc­ers, par­tic­u­larly those that count on share, have be­gun a string of bank­rupt­cies. Lay­offs are bound to worsen. (Source: 24/7 Wall St.com)

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.