UK oil and gas major BP has announced it will cut 10,000 jobs in a response to COVID-19 and the subsequent economic downturn.
The company is reducing expenditure across the business, with additional measures such as senior staff not receiving a pay rise this year and cash bonuses under question.
In February, BP’s new CEO Bernard Looney announced that the company would be re-organised to allow it to target decarbonisation.
In an email sent to staff, Looney said: “It was always part of the plan to make bp a leaner, faster-moving and lower carbon company. That is how we will deliver on our net zero ambition. And that is how we will seize opportunities throughout the energy transition.
“Then the covid-19 pandemic took hold. 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.”
Job losses – including 15% of the company’s 10,000 UK staff – will be mostly office based roles and will take place over the next year.
“We are protecting the frontline of the company and, as always, prioritising safe and reliable operations,” added Looney.
BP has an annual running cost of $22 billion (£17 billion), with around $8 billion (£6 billion) of this allocated as people costs. Given the collapsing oil price and the economic downturn triggered by COVID-19, the company needs to reduce overall capital expenditure by 25% this year, or $3 billion (£2 billion).
The RMT Union called the cuts a “devastating blow” for the energy industry, with general secretary Mick Cash adding: “RMT and the offshore unions have been warning the government for months of the need for an urgent plan to protect offshore jobs and skills from the double whammy of Coronavirus and depressed oil prices.
“An offshore jobs taskforce needs to be appointed immediately, including the trade unions to prevent this catastrophic loss of jobs and skills to the national economy.
“Offshore workers will not be made to pay for successive government's failure to tax and regulate North Sea oil and gas companies in a sustainable manner. Policies must be adopted, and quickly to secure a just transition to a net zero carbon economy.”
COVID-19 has stretched energy companies economically, and BP is not the only company to turn to redundancies. In May, OVO Energy announced 2,600 redundancies, as the lockdown put pressure on the company’s integration of SSE Energy Services.
However, renewable energy companies remain largely positive in their outlook, given the key role the sector will play in decarbonisation and by extension the COVID-19 economic recovery process.
As part of the BP’s February announcement, the company is increasingly targeting clean energy sectors and technologies to bolster it for the future. This includes BP Ventures looking to create a portfolio of “complementary” investments, including into artificial intelligence.