Energy giants cut 12,500 jobs
THE fall in oil and gas prices has taken a heavy toll at Royal Dutch Shell and Centrica, which together plan to slash 12,500 jobs.
The two energy giants revealed the huge cuts yesterday in a graphic illustration of the effects of a prolonged low oil price.
Shell unveiled job reductions of 6500 – from a global staff of more than 90,000 – as it sells assets, scales back expansion and chops costs. It is not yet clear how many will go in the UK.
British Gas owner Centrica revealed a total of 6000 posts to be cut over five years, including 5000 in the UK.
Centrica will also create 2000 new jobs so its net loss will be 4000, around 10pc of its workforce across head office, exploration and its British Gas business.
The drastic cutbacks announced yesterday are the latest to hit the energy sector.
It has been forced to act as oil prices have nearly halved since last June. The entire industry, from oil services firms and contractors to the major oil and gas producers, has been affected.
Brent crude prices fell to a near six-year low in January and are now around $53.48 a barrel compared to around $110 in June 2014.
The bloodbath will raise concerns for the UK’s employment market. Britain has enjoyed a jobs miracle with unemployment down to 5.6pc compared with 11.1pc in the eurozone.
Britain is enjoying the secondlowest unemployment rate in the European Union.
The reduction in the oil and gas sector is being suffered globally, but at home the cuts in the oil market will be felt acutely in Scotland.
Aberdeen is the most vulnerable city to job losses in the North Sea oil and gas industry, with around 10pc of all work there linked to the sector.
Industry body Oil & Gas UK, which has more than 500 members, estimated that 5500 job cuts have already been announced.
Shell’s announcement came as it revealed a 37pc tumble in second quarter profit to £2.1bn. Chief executive Ben van Beurden said that low oil prices ‘could last for several years’.
He announced an increase in asset sales which will now add up to £32bn over four years to 2018, and a spending cut of 20pc this year – with plans for more next year.
Van Beurden also issued a clear message to shareholders that its £55bn takeover of rival BG Group was on track and made sense even at lower oil prices.
He said once the deal is complete – expected to be some time next year – he will ‘reshape the com- pany’, meaning further cuts, to focus on fewer, higher-value assets.
It maintained its dividend at 30p a share. Shell shares rose 84p to 1861p and BG shares climbed 39.5p to 1079.5p.
At Centrica, chief executive Iain Conn, who joined from BP in January, revealed details of his strategic review and plans to sell £1bn of assets including its Canadian gas operations, its business in Trinidad and Tobago and its wind division.
But he said its North and Irish Sea exploration and production assets remain core to the business. Its interim dividend was in line with expectations at 3.57p.
Revenue fell 2pc to £15.5bn and operating profit slipped 3pc to £1bn. The British Gas business saw profit double to £528m. Centrica shares slipped 8.6p to 266.6p. ÷ NUCLEAR warheads maker the Atomic Weapons Establishment is to scrap 500 posts at its Aldermaston and Burghfield sites in Berkshire. It makes Britain’s Trident nuclear warheads and stores nuclear waste from submarines. The company wants to ‘improve and streamline’ its operations.