BP to cut 10,000 jobs as COVID-19 speeds up major reorganization
BP Plc. plans to cut 10,000 jobs as the coronavirus pandemic accelerates the company’s move to slim down for the energy transition.
The public health crisis has hit company earnings and forced many to change the way they operate. European competitor Royal Dutch Shell Plc. is said to be offering voluntary redundancies in a bid to become leaner, and U.S. rivals Chevron Corp. and Marathon Oil Corp. are among others laying off employees.
BP will let go of 14 per cent of its workforce, CEO Bernard Looney said in an internal note. The move will mostly affect office-based staff and those holding senior roles, with the top 400 positions expected to be cut by one-third.
Looney told staff that the job cuts were in line with plans set out in February to prepare BP for deep reductions in carbon emissions.
At the time, he said BP would dismantle its upstream and downstream businesses and replace them with 11 new teams.
“I think it would be insincere not to suggest that there will be some staff layoffs as part of this program,” Looney said in an interview with Bloomberg in February. The pandemic and crude’s subsequent collapse have however accelerated the process, leading the company to “go deeper at this stage than we originally intended,” he said in the note.
“Because of the changes in the reporting structure, BP was always more likely to make changes to headcount,” than its European peer Shell, which is largely continuing operations as before, Jefferies analyst Jason Gammel said.
“I’m surprised it’s such a big cut.” Days after taking BP’S helm, Looney said the company would eliminate all emissions from its own operations and production by 2050, as well as slashing those produced by its consumers. Since then, oil prices have plunged as the coronavirus pandemic has cratered demand, forcing producers to rein in spending and put projects on hold. Looney is adamant the crisis only reinforces the need to “reinvent BP” and press ahead with its new climate ambition.
Last month, BP began the second phase of its reorganization, reducing senior manager positions to around 120 people from 250. The new appointments will begin their roles from July 1 and continue the reorganization, which is expected to be finalized by the end of the year.