Impact of virus
BP expected to cut 2,000 UK jobs as oil demand falls
Bernard Looney: ‘we are spending more than we make’
About 2,000 BP jobs are expected to be lost in the UK from among 10,000 announced by the company in response to the global slump in demand for oil because of the coronavirus crisis.
The oil giant had put redundancies on hold during the lockdown but told staff on today that about 15% of them will leave by the end of the year. The figure for the UK is an estimate at this stage.
New chief executive Bernard Looney said in an email to staff: “The oil price has plunged well below the level we need to turn a profit.
“We are spending much, much more than we make – I am talking millions of dollars, every day.”
Oil demand has fallen as people around the world have been housebound. As a result, the cost of oil fell to less than $20 a barrel at the peak of the crisis, less than a third of the $66 it cost at the start of the year.
It has since partly recovered and was trading today at around $42 a barrel following a decision by the Opec+ countries to extend production cuts by a further month.
However, there have been warnings for some time that thousands of jobs would be lost as a result of falling demand.
BPs office-based workers, mainly in the south, are expected to bear the brunt of the redundancies.
“It was always part of the plan to make BP a leaner, faster-moving and lower carbon company,” Mr Looney – who took over as the boss of BP in February – said in his email to staff on Monday.
“Then the COVID-19 pandemic took hold,” he said. “You are already aware that, beyond the clear human tragedy, there has been widespread economic fallout, along with consequences for our industry and our company.”
BP said it planned to go ahead with a $0.11 per share dividend to shareholders.
Energy expert Professor David Elmes from Warwick Business School said other firms would question how much they can hand out to shareholders as a result of the crisis.
“The job losses at BP are symptomatic of the wider challenges facing the industry,” he said. “Coronavirus has reduced oil demand and the price per barrel has plummeted, but that has happened in a wider context of short-term and long-term decline.”
“All firms in the sector will all be looking at how they can cut costs, shift their activities to the lowest cost field, trim investment, and thinking hard about what dividend they can pay.”
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