BP to cut 10,000 jobs worldwide amid huge drop in demand for oil
BP has announced plans to cut 10,000 jobs, representing about 15% of the oil group’s 70,000 staff, by the end of the year.
Bernard Looney, BP’s chief executive, told employees that the job cuts were essential to enable the company to cope with a global collapse in demand for oil owing to the coronavirus pandemic. He said BP must reinvent itself and emerge from the crisis a “leaner, faster-moving and lower carbon company”.
The London-headquartered group has not said how many jobs will be lost in the UK, but it is thought the figure could be close to 2,000. About 15,000 people work for BP in the UK.
“You are already aware that, beyond the clear human tragedy, there has been widespread economic fallout, along with consequences for our industry and our company,” Looney told staff in a company-wide email on Monday. “The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make – I am talking millions of dollars, every day. And as a result, our net debt rose by $6bn [£4.66bn] in the first quarter.”
Looney, who took over as chief executive of 111-year-old BP in February, said: “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.”
He said the most senior levels of BP would bear the biggest impact, and the number of group leaders would be cut by a third.
BP has not cut its dividend payout to shareholders in the wake of the pandemic, even though some analysts have said its current payouts are unsustainable. In April it announced it would pay out $2.1bn to shareholders. The first-quarter dividend of 10.5 cents per share was up 2.4% on the previous quarter.
Its main UK rival Royal Dutch Shell, meanwhile, cut its interim dividend by 66% to 16 cents.
Jake Molloy, regional officer at the RMT union, said the job cuts were a “devastating disaster” for BP’s staff, and it was “absolutely galling” to see the company cutting so many jobs just weeks after it announced the huge shareholder payout.
“It’s absolutely galling and appalling that just a few weeks ago we see billions handed out in shareholder dividends, and now they are cutting 10,000 jobs,” Molloy told the Guardian. “Something needs to be done about this. It’s a terrible way to treat staff.”
He called on the government to intervene and prevent companies from making large numbers of people redundant if they refuse to cut their dividend payments. “BP’s actions today demonstrate what BP is about – money for shareholders and no care for staff.”
He said the government needed to speed up the transition to green energy and investment in retraining oil workers in future energy technologies. “All the work that is planned for the future needs to happen now. The industry is on its knees right now.
Remember these companies are exploiting our [the country’s] natural resources, and we as a society should see a return, rather than letting companies line shareholders’ pockets.”
Looney said he was banning any pay rises for senior staff until at least March 2021. He said bonuses were “very unlikely this year”, and warned staff not to factor in any bonuses in their personal finance planning.
The world’s oil demand has fallen to 25-year lows following the outbreak of Covid-19, which has severely limited demand for transport fuels, causing global oil prices to fall by two-thirds. The oil market crisis has wiped billions from major oil companies, including BP which reported a loss for the first quarter of this year.
The Brent crude oil price started the year at about $65 a barrel, but plunged as low as $16 in April as the pandemic took hold. It has since recovered to about $40 a barrel.
Last month Looney told the Guardian he was “more convinced than ever” that BP must embrace the energy transition following the collapse of global oil markets. “I am more convinced than ever that this is the right thing to do, and we need to crack on with it,” he said. “The pandemic only adds to the challenge that already exists for oil in the medium to long term.”
BP’s shares rose 1% on Monday to 370p. The shares, which were worth about 500p in January, fell as low as 233p in March.
Chevron, the second-largest US oil producer after Exxon, has said it would cut 10%-15% of its global workforce as part of an ongoing restructuring.