Oil and gas contractors will not be pleased to hear the announcement by the former chairman of Wood Group Sir Ian Wood, that the industry is set for more job cuts.
Wood stated that oil and gas companies operating in the UK’s North Sea could cut about 45,000 jobs in 2016. Presently, the industry is cutting about 150 jobs a day, and this means the number of jobs losses this year would be similar to 2015, according to Wood. He also believes that the losses have not slowed down in 2016.
The reason for the job losses is the fall in oil prices. Though the price has recovered and is currently $40 a barrel, in January 2016 the Brent crude oil price was $27 a barrel – the lowest in the last 12 years. Industry experts believe that after a high of $99.03 per barrel in 2014, the industry is struggling as the profits have decreased. This is leading companies to cut their costs, and job cuts appear to be the answer to cost cutting.
According to statistics from Oil and Gas UK, in 2014 there were 440,000 workers employed in the oil and gas industry, but this number fell to 375,000 in September 2015. If Wood’s predictions are correct, the number of workers in the sector will decrease to 320,000 this year.
Many companies have announced job cuts recently, including Petrofac Shell, BP and Talisman Sinopec. BP announced in January 2016 that it was cutting 600 employees from its North Sea operations.
However, Wood also predicts things will improve. He stated that with the government assisting the industry it will witness a recovery, but more needs to be done; including introducing stimulus, and working with the banks and loss-making companies.