Oil Companies Restructure in Low Oil Price Era... "BP to Cut 10,000 Jobs"

[Asia Economy Reporter Naju-seok] Due to the decline in oil prices, leading global energy companies are undertaking large-scale restructuring. Following the announcement of workforce reduction plans by the US-based Chevron, British Petroleum (BP), one of the world's largest energy companies based in the UK, has also decided to cut 14% of its total employees.

[Image source=Reuters Yonhap News]

According to the Wall Street Journal (WSJ) on the 8th (local time), BP will restructure about 10,000 employees out of its total workforce of 70,000. Additionally, it has decided to freeze wages for managerial positions. Bernard Looney, BP's CEO, expressed in an email to all employees, "Due to the COVID-19 pandemic, oil prices have plummeted, putting us in a situation where we cannot generate profits," and lamented, "Our daily expenses amount to millions of dollars more than our daily revenue."

BP estimates that through this restructuring and wage freeze, it will be able to reduce costs by approximately $2.5 billion (2.99 trillion KRW) by the end of next year.

Looney, who took office in February this year, had previously announced plans to streamline BP and transform it into a flexible organization while transitioning into a low-carbon company. However, before realizing these plans, the market environment changed due to the oil price crash, forcing the company to initiate large-scale workforce adjustments. Regarding this restructuring, BP plans to reduce its 400 executives to about one-third.

The WSJ evaluated BP's restructuring as predictable. This is because international oil prices have recently fallen to their lowest levels in the past decade, severely impacting oil-related companies.

Chevron, the second-largest US oil company, has also announced restructuring plans. Chevron will cut 15% of its 44,679 employees. Chevron announced, "We will achieve the workforce reduction target within this year." Royal Dutch Shell has also announced plans to implement voluntary retirement as part of its workforce restructuring.

Experts analyzed that while the scale of hiring varied depending on whether the crude oil market was booming or not, there has never been a situation as severe as this. Oswald Klint, an analyst at the US asset management firm AllianceBernstein, said, "There has never been a time without restructuring when oil prices were declining," and added, "Further restructuring of oil-related companies is expected." The WSJ predicted that as oil-related companies cut capital expenditure budgets, labor demand in the related industries will remain sluggish for the time being.

This content was produced with the assistance of AI translation services.