-By Divine-Favour Efemena
The Covid-19 global pandemic which led to the fall of crude oil price drastically has beginning to take its toll on the oil industry. Some oil companies have not been able to meet target as they plan to cut cost amidst huge loss especially the multinational oil companies.
Oil giant, BP will cut about 15% of its workforce in response to the coronavirus crisis and as part of its plan to shift from oil and gas to renewable energy. Renewable energy is seen by energy experts as a way of close substitute to oil since current trend further shows vulnerability of crude oil business.
BP’s Chief Executive, Bernard Looney told the company’s employees in a global online call that the London-based company will cut 10,000 jobs from the current 70,100 of its workforce.
According to Looney, “We will now begin a process that will see close to 10,000 people leaving BP – most by the end of this year.”
The company’s shares were up 3.3% by 1230 GMT, against a 2.2% gain for the broader European energy sector.
It revealed that the affected roles will be mostly senior office-based positions and not front-line operational staff.
About a fifth of the job cuts will take place in Britain, where BP employs 15,000 people, a company spokesman said.
Like all the world’s top energy companies, BP has cut its 2020 spending plans after the coronavirus pandemic brought an unprecedented drop in demand for oil. BP has flagged a 25% cut to $12 billion this year and said it would find $2.5 billion in cost savings by the end of 2021 through the digitalisation and integration of its businesses.
However, Looney said the company is likely to cut costs further if crude demand and prices continues to fall.
BP is giving no pay rises to senior employees until March 2021 and said it is unlikely to pay any cash bonuses in 2020.
The job reductions are also part of Looney’s drive to make the 111-year-old oil company more nimble as it prepares for the shift to low-carbon energy.
The BP CEO noted that, “It was always part of the plan to make BP a leaner, faster-moving and lower-carbon company.”
Looney explained further that the coronavirus crisis amplified and accelerated BP’s transition plans.
Earlier before the pandemic, he had announced a large round of senior management appointments, halving the size of BP’s leadership team under his plan to reshape the company’s structure.
Looney became the CEO of BP in February and has created 11 divisions to reinvent BP and dismantle the traditional structure dominated by its oil and gas production business and its refining, marketing and trading division.
The decision of BP is expected to metamorphosed in other multinationals that have made known their intention to take similar actions.
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