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Supermajor BP will cut 10,000 jobs, or around 15 percent of its workforce, as it looks to cut costs amid the oil price crash resulting from the coronavirus pandemic, chief executive Bernard Looney said on Monday.
As BP aims to reinvest itself as an energy company and a net-zero company by 2050 and sooner, the UK-based supermajor is resorting to job cuts—most of which in office-based positions, in order to reduce its costs as the downturn has severely affected its finances.
In March, after oil prices crashed with the demand slump and the Saudi-Russia oil price war, BP said that it would not take any action on jobs for three months.
“We introduced a three-month redundancy freeze back in March to ease some of the immediate worry for people. That moratorium ends today. 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, prioritizing safe and reliable operations,” Looney said.
Going forward, the reinvented BP will see the most senior levels bear the biggest impacts.
“As an example, our new Tier 2 structure has more than halved the number of most senior level jobs – and we are looking to reduce the number of group leaders overall by around one third,” the chief executive said.
The oil price crash means that BP currently spends much more than it makes, Looney said.
“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 $6 billion in the first quarter,” he noted.
Apart from cutting jobs, BP will also aim to reduce its capital expenditure by 25 percent, or around US$3 billion, this year, and cut operating costs, including people costs, by US$2.5 billion in 2021, and “we will likely have to go even further,” Looney said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.