BP has announced that there will be hundreds of job losses in their UK offices as part of their global job cuts. The jobs will be lost from London. Sunbury and Aberdeen as they have to cut back due to falling oil prices and the spillage in the Gulf of Mexico. The staff cutbacks will be made in the areas of legal, communications and procurement.
Worldwide the company employs 84,000 people and 15,000 of these are in the UK. The price of oil went down by 40% in 2014 which means that BP and other oil companies have had to think about exploration and production and whether there is a current need to continue with these.
BP has sold off $40bn worth of assets to pay for the Deepwater Horizon accident and this means they have half the amount of pipelines and offshore fields as well as less wells.
Other oil companies such as Chevron, Shell and Statoil have also announced job losses s they have to also cope with the reduction in demand for oil as well as demands from shareholders for higher dividends.
Eighteen months ago there was a warning that Shell would be reviewing its exploration and production activities in light of more streamlined activities. BP will announce how it plans to change the way that the company operates and concentrate on value not volume. With the reduction in oil prices as well as sanctions against Russia with a 20% holding in Rosneft they have had a lot to deal with. This may even lead to Putin seizing the BP assets in Rosneft with Russia being so cash strapped at the moment.
The lower prices have been partly due to the US relying more on shale for fuel and a lower demand as well. Opec also declined to cut production so there is a saturation in the market. There is worry in the market about how much more prices can fall.