Centrica axes 5,000 oil jobs while energy supply profits soar
Plunging prices force Shell to slash 500 posts
THOUSANDS of North Sea jobs were yesterday axed by the country’s largest energy firm despite doubling profits on household supplies.
Scottish Gas owner Centrica announced it is to slash 5,000 UK jobs as it dramatically scales back on British offshore activity.
In a further devastating blow to the North Sea, energy giant Shell is cutting 500 British jobs as it seeks to lose 6,500 posts worldwide to make savings of £2billion a year.
But despite the jobs cull, Centrica disclosed that British Gas profits for the past six months were £528million, up 99 per cent from £265million, in the same period last year.
Overall, Centrica profits were £1billion, down 3 per cent on l ast year. Profits, however, collapsed at the firm’s oil and gas production division as they fell 78 per cent to £116million due to plunging prices.
Centrica has now decided to radically restructure the busi- ness, moving away f r om exploration and the supply of power at a wholesale level towards selling energy to families and businesses.
As a result it is cutting 6,000 jobs, most of these related to its offshore activities all round the UK with an estimated 5,000 British posts lost.
An extra 2,000 people will be hired elsewhere in the group, giving a net l oss of 4,000 jobs. The energy giant said it will also shave £1.5billion off its exploration and production costs over the next five years.
Chief executive Iain Conn said: ‘Our purpose is to provide energy and services to satisfy the changing needs of our customers, and as such we will focus our growth ambitions on customer-facing activities.’
Shell chief Ben van Beurden said: ‘We have to be resilient in a world where prices remain low.’
The price of oil is about $53 (£35) a barrel, down from about $110 a barrel a year ago.
More than 6,000 jobs have been axed i n the past six months and a total of 15,000 could be lost this year.
Union leaders reacted with fury to the latest job cuts and accused Centrica of ‘betraying’ the workforce.
Unison Scotland regional organiser Janet Stewart said: ‘This is a bitter blow, especially considering the efforts made by staff in recent years.
‘Our members have been very loyal to the company, providing excellent services to customers while under great external pressure.’
Centrica’s profits bonanza came after it failed to pass on falling wholesale prices to struggling customers.
Wholesale energy prices fell by more than 20 per cent last winter compared to the year before, but the firm’s 11million customers saw no reduction in bills to reflect this fact.
Mark Todd of price comparison site energyhelpline said the profits were ‘shocking’.
Consumer policy director at uSwitch, Ann Robinson, said: ‘Suppliers must do the right thing by passing on savings to help consumers.’
‘Pass on savings to consumers’
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.