The slump in oil prices has BP "concentrating minds on making the organisation more efficient" which means, as The FT translates, the 'unequivocally good news' of lower oil prices is accelerating plans for the oil giant to reduce its headcount. The Sunday Times reports, BP is to ax middle managers and freeze projects as Brian Gilvary, the finance director, said: "what you’ll see with this simplification plan is that headcounts are starting to come down across all of our activities in upstream, downstream and in the corporate centres — essentially the layers above operations." Gilvary added that the company would slash the oil price assumption used to set its day-to-day budget.
BP will announce on Wednesday that hundreds of jobs will be lost at offices in London, Sunbury and Aberdeen as part of huge global staff cuts resulting from plunging oil prices and the Gulf of Mexico spill.
Bob Dudley, the chief executive, will tell a meeting of City investors, that major financial savings will be made as support staff in areas such as procurement, legal and communications are scaled back.
BP is accelerating plans to reduce its headcount, in a sign of how global oil companies are looking to control costs in the face of a lower oil price.
The oil major is looking at its non-operations staff, including back-office employees, that have been kept on as the company has shed production assets in its portfolio.
“Oil is concentrating minds on making the organisation more efficient and the right size for the smaller portfolio we have now,” BP said.
Analysts expect cuts in exploration spending and possible project deferrals.
Brian Gilvary, BP’s chief financial officer, told the Sunday Times: “We have got flexibility in our programme to trim into next year if that’s what we need in a new world of oil at $70 or $60, or whatever the number is.”
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Lower for longer it is then... welcome to high-yield credit hell...