BP To Slash 10,000 Jobs As Coronavirus Creates Slump In Energy Markets

From The Daily Caller

Varun Hukeri Reporter June 08, 2020 12:38 PM ET

Oil and gas giant BP announced Monday that it will cut 10,000 jobs from its global workforce, citing the negative impact of the coronavirus pandemic on the energy industry.

In an email sent to BP staff, CEO Bernard Looney said that the company’s net debt rose $6 billion in the first quarter of 2020, and that the layoffs would mainly affect senior level employees in office-based roles. Looney also pledged to bring down capital expenditure by 25% and trim the roughly $22 billion spent annually on operational costs, the Associated Press reported.

The energy industry has been hit hard by the coronavirus pandemic as demand for fuel and other resources dipped amid lockdowns and limits on business, travel and daily life. Since the beginning of the year, oil prices have dropped more than 90% partially because of the coronavirus, and the price of US crude oil even fell below $0 in April.

Because of the combination of unprecedented low oil prices, economic lockdowns and the pandemic, oil companies have reported huge losses this year. Energy analysts also worry that an economic downturn could cripple energy markets in the long-term.

Warwick University professor David Elmes, who is a leading expert on energy issues, stated that BP’s decision reflects wider challenges facing the energy industry as companies take on debt to finance operations in a time of greater capital constraint. (RELATED: China Poised To Buy Up Texas Oil Amid Coronavirus Slump)

European-based energy firms in particular have also announced plans to diversify their economic activities and gradually shift away from oil and gas, indicating that layoffs and corporate restructuring may become more likely in the future. “If this situation continues, there will be intense discussions about what can they do to move faster,” Elmes said.

Looney added that the decision to cut 15% of its workforce is also motivated by BP’s plan to transition to renewable energy, and a BP spokesman further stated that the coronavirus has only accelerated this plan, Reuters reported. BP aims to become a net-zero company by 2050, which would require eliminating 415 million tons of emissions.

This initiative would also require changing the traditional structure of the company, which has been dominated by oil and gas, and to rethink the company’s operations, including the $8 billion spent annually in “people costs.”

“It was always part of the plan to make BP a leaner, faster-moving and lower-carbon company,” Looney said in a statement posted Monday on BP’s website.

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June 9, 2020 2:27 am

“Looney added that the decision to cut 15% of its workforce is also motivated by BP’s plan to transition to renewable energy…”

So much for “green”‘jobs.

Reply to  Phil
June 9, 2020 5:09 am

I’m somewhat familiar with BP’s previous forays into “renewable” energy, all of which turned out not to be “green” but rather brown and smelly.

Danley Wolfe
Reply to  Scissor
June 9, 2020 12:18 pm

Rather brown and smelly, should mention Baron John Browne of Madingley, former BP chairman who started BP’s foray into green energy rebranding British Petroleum as green “Beyond Petroleum” BP. And went on a buying spree acquiring companies like Amoco and resulting in disasters such as the Macondo blowout / Deepwater Horizon, major accidents at several plants that BP had acquired resulting in many deaths. Ended up selling a lot of key assets acquired from Amoco and others, destroying value, while exiting the petrochemical business.

Reply to  Scissor
June 9, 2020 2:02 pm

the layoffs would mainly affect senior level employees in office-based roles.

Trimming the dead wood of bureaucratic overhead is a great place to start.

The “zero carbon ” crap from BP is rather worrying though.

French Total SA seem to be signing up the same BS.

I wonder who is pulling the strings to get these oil majors to shoot themselves in both feet. Surely they do not actually believe CO2 is “dirty”.

I was thinking of investing in Total, now I’m having serious second thoughts.

Reply to  Phil
June 9, 2020 8:33 am

I thought going green was supposed to increase employment…..

Reply to  Phil
June 12, 2020 4:06 am

The Danish state oil company also reinvented itself, moving away from oil into the lucrative wind turbine building and operating business. Bolstered by massive taxpayer subsidies, they built the world’s largest offshore windfarm, Hornsea One. Just follow the money.

June 9, 2020 2:36 am

Neil Fergusons girlfriend must be happy… I wonder what the democrats will say about it…

Patrick MJD
Reply to  Sunny
June 9, 2020 3:00 am

I don’t think she cares. Well, it’s clear she doesn’t! She’s got a 1.9 million pound house in a posh part of England, a 30 odd year old husband, a 50 year old lover who she can visit any time she likes during lockdown to get her parts greased, while millions struggle to pay for a meal!

Steve Case
June 9, 2020 2:36 am

Left-wing lunatics are no doubt dancing in the streets and high fiving each other over this news.

June 9, 2020 2:38 am

BP won’t exist inside 50 years.
If you’re a shareholder get out on the next bounce.

Reply to  Warren
June 9, 2020 3:25 am

“Warren June 9, 2020 at 2:38 am
BP won’t exist inside 50 years.
If you’re a shareholder get out on the next bounce.”

“50 years”?
Get out next bounce?

Nebulous flimsy far in the future prediction with immediate drastic financial advice?
Professional doom crier, are you?
Pitiful pathetic pusher of panic for panic’s sake, not present reality.

The author of the article apparently failed to consider the effects of Russia and Middle East flooding fossil fuel markets prior to the COVID-19 episode.

Reply to  ATheoK
June 9, 2020 4:24 am

Read BP balance sheet followed by a due diligence of its management and major shareholders and their green ambitions then reflect on your rant.

Reply to  ATheoK
June 9, 2020 8:12 am

If they get out of oil and into “renewable” energy, then it won’t matter what Russia and the Middle East do.

Reply to  ATheoK
June 9, 2020 1:03 pm

Layoffs strengthen companies. They lay off marginal performers and problematic people, and don’t rehire all of them when things get better.

Reply to  Ralph Dave Westfall
June 9, 2020 2:11 pm

If they can lay off 10k “senior” staff and still function, I’d say this was long over due.

COVID is finished. The BLM riots have hardly been respecting “social distancing” rules yet after ten days of “unsafe” conduct, there is not the slightest sign of a “second wave” or an uptick in new cases.

comment image

In short it was all a load of bollocks.

Now we can get on with life again , start burning all the fossil fuels we like, oil prices will be back to sustainable realistic values and BP will be boasting record profits by year end, much leaner for having dumped 10,000 parasitic middle management office workers.

June 9, 2020 2:49 am

He was also quoted as saying that BP were “hemorrhaging roughly a million $ a day in costs….” makes you wonder how their “management” allowed this to happen in the first place.

Virtue signalling is not a help in running an oil and gas exploration and production Co. Get woke, go broke.

Not to worry, there will be plenty of smaller, leaner more agile Operators in those affected basins who are more than willing to make the economics work.

Reply to  AleaJactaEst
June 9, 2020 8:13 am

It’s not so much that they allowed it to happen, it’s that they allowed it to continue so long. I guess they believed that Russia and Saudi Arabia would patch things up a lot quicker than they did.

Patrick MJD
June 9, 2020 3:01 am

Jobs are being cut across the board here in Australia. I am surprised Ferguson hasn’t been lynched by now!

old white guy
Reply to  Patrick MJD
June 9, 2020 5:47 am

Jobs have been and are still being lost world wide. The virus has caused none of this. The insane reaction to a flu virus has and should reversed immediately. Had this been treated as the flu it was, we would still be complaining about global climate change, not job losses and race riots.

Patrick MJD
Reply to  old white guy
June 9, 2020 4:50 pm

I am totally aware that the virus had nothing to do with the current situation and is all due to political over-reaction to the modeled threat.

Ron Long
June 9, 2020 3:12 am

“…since the beginning of the year, oil prices have dropped by more than 90%…” When was this written? Oil prices have recovered about half of their loss, and remember, oil prices were reduced by both corona virus and the simultaneous (and ill-advised) pissing contest between Russia and Saudia Arabia. BP executives appear to be operating on some idea other than “maximize shareholder wealth” and one has to wonder what that might be? Here’s a clue: BP is going Green by 2050? BP used to be an oil exploration, development, and production company, and now what?

Adam Gallon
Reply to  Ron Long
June 9, 2020 4:26 am

They’re diversifying, as any company does, if they want to carry on existing in a changing market.

Ron Long
Reply to  Adam Gallon
June 9, 2020 7:10 am

Adam Gallon, forgive me but I’m thinking you never sat in Board meetings discussing your core corporate identity, whether it should or should not be modified, and what the investor consequences might be with either change or no change. Big companies, like BP, don’t go lurching around outside their investor identity, they undertake careful market studies, both as to profit motive and shareholder identity. Changing market? Yea, V-shaped recovery from all the nonsense.

Just Jenn
June 9, 2020 5:08 am

Slashing 10K jobs of senior management seems to me like they are ridding the top heavy portion of the company. Nothing new, companies tend to do it over time, those that fall prey to every position needs 4 managers.

Ron Long
Reply to  Just Jenn
June 9, 2020 7:12 am

OK, they might be utilizing a “crisis” to solve the Peter Principle, problem.

Tom in Florida
Reply to  Just Jenn
June 9, 2020 7:47 am

“If the Covid didn’t rid us of these expensive old farts, then we will have to do it manually.”

June 9, 2020 6:02 am

Be sure and take out the BP bean counters that caused a lot of the short cuts and safety violations with worker deaths over the years.

D. J. Hawkins
Reply to  ResourceGuy
June 9, 2020 9:54 am

It isn’t the bean counters. After all, all they do is…count beans. It’s operational management that decides how they respond to the count.

Richard ( the cynical one)
June 9, 2020 6:04 am

Headline should read “as the contrived response to Coronavirus creates slump in energy markets.”

Tom Bakewell
June 9, 2020 8:02 am

in the oil patch, BP was taken to mean “Big Problems”

Patrick Healy
June 9, 2020 9:16 am

It is bad enough when the Loonitics are running the asylum, but with this delusional Kerryman in charge of my pension, I am really worried.

June 9, 2020 9:22 am

All change-

“Government responses should focus on detecting and isolating infected people with symptoms, the World Health Organization said.
Preliminary evidence from the earliest outbreaks indicated the virus could spread even if people didn’t have symptoms.
But the WHO says that while asymptomatic spread can occur, it is “very rare.”

June 9, 2020 9:23 am

Lock down looking very unnecessary- I wonder if , Mr Monckton , will change his mind.

Reply to  richard
June 9, 2020 2:17 pm

If he does , he will never admit it publicly.

June 9, 2020 9:24 am

WMO- “If asymptomatic spread proves to not be a main driver of coronavirus transmission, the policy implications could be tremendous. A report from the U.S. Centers for Disease Control and Prevention published on April 1 cited the “potential for presymptomatic transmission” as a reason for the importance of social distancing.”

Smart Rock
June 9, 2020 9:54 am

Looney added that the decision to cut 15% of its workforce is also motivated by BP’s plan to transition to renewable energy

Looney tunes?

Reply to  Smart Rock
June 9, 2020 2:23 pm

so they know it’s a white elephant and are downsizing before they even start.

Reassuring news for investors.

Bruce Cobb
June 9, 2020 2:00 pm

Sounds like BP drank the koolade.

June 9, 2020 10:17 pm

Nothing new here. Oil price drops and oil company has layoffs.

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