BP Plc plans to cut 4,000 jobs in its crude- oil production division this year as prices trade near a 12-year low.
The company will reduce its worldwide upstream workforce to less than 20,000, London-based spokesman David Nicholas said by phone. The cuts include 600 people working at North Sea projects: they’ll lose their positions over the next two years “with the majority in the first year,” he said.
BP, one of the first producers to predict a prolonged oil price slump, is cutting staff after dismissing 4,000 employees last year. The oil industry has cut more than 250,000 jobs in the past 18 months as companies reduce spending on exploration and defer new projects amid declining profit and revenue.
“It’s a reflection of how oil companies have been forced to react to the downturn,” Jason Gammel, a London-based analyst with Jefferies International Ltd., said by phone. “It could have a negative impact on oil production levels in the future but protecting the balance sheet is the primary concern at this time.”
BP shares climbed 2.4 percent as of 1:54 p.m. in London, paring this year’s decline to 5 percent after a 14 percent drop in 2015.
The company’s adjusted net income has dropped for five consecutive quarters compared with year-earlier periods. On Monday, BP said it has started a consultation process to reduce jobs at its fuel retail business in Germany, after Welt am Sonntag reported that it was planning to cut as many as 800 jobs.
BP currently employs about 3,000 people at North Sea projects. The company had 84,500 employees worldwide at the end of 2014, according to data compiled by Bloomberg.
The number of jobs cut by oil and gas companies around the world has passed 250,000, with still more to come, industry consultant Graves & Co. said in November. Royal Dutch Shell Plc, Europe’s biggest oil company, planned to fire more than 6,500 employees last year and lose another 2,800 jobs after it buys BG Group Plc.
BP Chief Executive Officer Bob Dudley said in October that he plans to be able to pay dividends without having to borrow money if oil prices are about $60 a barrel by 2017, echoing a similar strategy from French producer Total SA. BP aims to reduce annual cash costs by $6 billion over that period.
Brent crude dropped to the lowest in almost 12 years this week and was trading at $31.89 a barrel as of 1:51 p.m. in London. The international benchmark has declined about 15 percent this year, after falling 35 percent in 2015.