• 2 hours Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 3 hours Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 4 hours Iraq Steps In To Offset Falling Venezuela Oil Production
  • 6 hours ConocoPhillips Sets Price Ceiling For New Projects
  • 3 days Shell Oil Trading Head Steps Down After 29 Years
  • 3 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 3 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 3 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 3 days Venezuela Officially In Default
  • 3 days Iran Prepares To Export LNG To Boost Trade Relations
  • 3 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 4 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 4 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 4 days Rosneft Announces Completion Of World’s Longest Well
  • 4 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 4 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 4 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 4 days Santos Admits It Rejected $7.2B Takeover Bid
  • 5 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 5 days Africa’s Richest Woman Fired From Sonangol
  • 5 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 5 days Russian Hackers Target British Energy Industry
  • 5 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 5 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 5 days Lower Oil Prices Benefit European Refiners
  • 5 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 6 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 6 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 6 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 6 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 6 days OPEC To Recruit New Members To Fight Market Imbalance
  • 6 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 7 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 7 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 7 days GE Considers Selling Baker Hughes Assets
  • 7 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 7 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 7 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 7 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 7 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
U.S. Shale To Beat Saudi Production Growth

U.S. Shale To Beat Saudi Production Growth

In its latest report, the…

Tax Cuts Insufficient To Halt North Sea Job Losses

Tax Cuts Insufficient To Halt North Sea Job Losses

The British government’s offer of “bold and immediate measures” for the North Sea energy industry evidently wasn’t enough for some companies groping for ways to cut costs because of the plunge in oil prices and reduced oil and gas reserves in the region.

George Osborne, Britain’s Chancellor of the Exchequer, says the country’s 2015 budget will cut tax revenue from North Sea oil from 50 percent to 30 percent to help stave off job cuts. Yet Royal Dutch Shell, the UK’s largest oil company, announced March 26 that it will eliminate 250 staff and contract workers this year to cut costs despite the incentive.

Evidently Shell didn’t jump to this decision, according to Paul Goodfellow, the company’s vice president for exploration and drilling for Britain and Ireland. “The North Sea has been a challenging operating environment for some time,” he said.

Related: Oil Markets Blow Yemen Crisis Out Of Proportion

Goodfellow welcomed Osborne’s tax incentives as “a step in the right direction,” but said they were no substitute for the companies’ duty to redouble its efforts to tackle costs and improve profitability if the North Sea is to continue to attract investment.”

Also Taqa, the oil company based in Abu Dhabi, said it would reduce its 550-member North Sea work force by about 100, most of them contractors and consultants. And it cautioned that “the process will take a number of weeks and involve consultation with our work force. Our work force are fully informed on the proposed changes and we will work to support and guide them through the process.”

This isn’t the first round of job losses in the North Sea.

Related: Wall Street Losing Millions From Bad Energy Loans

On Jan. 20, Talisman Sinopec said it would lay off 300 North Sea workers, an announcement followed a week later by BP, which said it would cut 300 jobs, nearly one-tenth of its work force.

None of this can be good news for Aberdeen, the focus of Britain’s oil industry, nor for Osborne, who promised a daring budget that he said should be equal to the task of countering an economic threat to the North Sea energy industry.

No matter how bold Osborne’s response, though, the challenge evidently was too great no matter what the response. The average price of crude oil has plummeted by more than 60 percent from about $115 per barrel in late June 2014. The price has stabilized somewhat lately, to just over $50 per barrel.

Related: Natural Gas Prices To Crash Unless Rig Count Falls Fast

Shell cited a warning by Oil & Gas UK, the trade association for Britain’s offshore oil industry, that because of high production costs, one-fifth of the oil reserves remaining in the region can’t be extracted at a profit if the price of crude doesn’t climb above that $50 level.

“Current market conditions make it even more important that we ensure our business is competitive,” Shell’s Goodfellow said. “Changes are vital if it is to be sustainable. They will be implemented without compromising our commitment to the safety of our people and the integrity of our assets.”

Shell said that it informed staff and contractors about the layoffs and other cost-cutting measures on March 26, and will soon enter a period of consultation on further economies, including adjustments in the patterns of its work shifts.

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News