London-based oil and gas giant BP Plc is planning to cut its workforce by up to 15 percent amid the global oil demand slump caused by the coronavirus pandemic. The company announced that the move could affect around 10,000 jobs throughout its various global facilities and offices.
One of the world's largest oil and gas firms had held off on reducing its workforce during the peak of the global coronavirus pandemic. However, the company has now likely been forced to move ahead with its cost-cutting plans given the continued global demand slump and the still relatively low price of oil.
BP informed workers of its plans on Monday, stating that some of them may end up losing their jobs by the end of the year. Analysts predict that the job cuts could affect more than 2,000 jobs in the UK alone. In its internal memo, BP chief executive officer, Bernard Looney, explained that the continual drop in global oil prices has forced them to implement cost-cutting measures in order to make a profit. He added that the company is spending much more than what it is making, in the range of "millions of dollars, every day."
During the peak of the global pandemic, oil prices had plunged to a low of $20 per barrel, less than a third of the $66 per barrel at the start of the year. The dip was mainly due to an excess in supply and a massive drop in demand as countries closed their borders to mitigate the spread of the disease. The lockdowns and travel restrictions essentially halted the consumption of fuel globally, resulting in a dramatic drop in global prices.
With most economies now slowly reopening, global oil prices have slightly recovered to around $42 per barrel. Despite the partial recovery, most oil and gas companies are still struggling to make a profit. To remedy the problem, companies have opted to implement drastic cost-cutting measures such as the idling of some facilities, removal of redundant operations, and cutting jobs.
In the UK, BP employs about 15,000 people, most of which are expected to bear the brunt of the job cuts. Workers in the company's retail operations will likely be the least to be affected by the new measure.
Looney mentioned in the company's internal email that the plan had always been to transform BP into a lean, low-carbon, and fast-moving company. The pandemic had simply just accelerated those plans and the company has had to react fast given the widespread economic fallout.
