Photo: Stuart Conway BP / Agence France-Presse
Oil prices have plunged since march, well below the threshold of profitability of BP, due to a demand marked by the cessation of the activity in the containment.
The giant british petroleum BP announced on Monday the removal of 10,000 jobs worldwide, or 15 percent of its workforce, to adapt to oil market hit by the health crisis and the fall in the price of the black gold.
The majority of these job cuts will take place by the end of the year and will mainly involve employees in administrative functions, says the group in a press release. The geographical distribution of job cuts has not been revealed, but they could be about 2000 people in the Uk, where the group employs 15,000 people, specified to the AFP a source close to the folder.
The hierarchy will not be spared, since BP will reduce by one third the number of executive officers, to the number of 400 for now.
These announcements were made by the general manager, Bernard Looney, during an online conference for staff from BP, which has 70 000 employees. “These are difficult decisions to take,” pointed out the skipper in an email to employees. “But we need to do what is good for BP “, and ” this will help us to be more efficient “, he added.
Outside of the job cuts, BP has decided not to proceed with increases in wages in 2020 for the employees with the most seniority. For others, they are deferred for a few months.
These are difficult decisions to make. But we must do what is good for BP and it will help us to be more efficient.
— Bernard Looney
The strategic plan announced in February, were already planning to form a group least great to be able to ensure a future less dependent on fossil fuels. The group is committed to achieve carbon neutrality by 2050.
Radical measures
But the health crisis has changed everything and has pushed BP to take radical measures. Oil prices have plunged since march, well below the threshold of profitability of BP in the face of a demand depressed by the shutdown of activity during the confinement.
Mr. Looney explained that his group spends a lot more money than it brings in its funds, of the order of several millions of dollars per day. BP had already announced at the beginning of April, a decrease of 25 % of its investment expenditures and a savings program of $ 2.5 billion in 2021, which is expected to be further strengthened. But unlike its competitor, Royal Dutch Shell, the group decided to maintain its dividend, is depriving them of this fact of financial margin.
Because of the fall in oil prices, BP suffered a loss of $ 4.4 billion in the first quarter. Thanks to the hopes of restarting the economies and production cuts of OPEC and its allies, the price of crude oil recently climbed back to around 40 us dollars.
“Job losses of this magnitude are shocking,” says Mel Evans of the NGO Greenpeace. “The employees of BP should be helped to accompany the transition towards renewable energy sources. It is time for BP to give priority to its staff, not the dividends, ” she says.
For Russ Mould, an analyst at AJ Bell, questioned by the AFP, ” to reduce costs just to keep the dividend is not really a strategy, even if this may please the shareholders in the short term “. According to him, BP would be less challenged if Mr. Looney ” decided to free itself of its dividend, which costs $ 7 billion per year, to redirect a portion of the funds in the long term investment “.
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