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BP to axe 1,000 jobs amid warning of oil price plunge to $40

Screen Shot 2014-12-04 at 20.54.03Oil giant BP has said it will rack up costs of at least $1 billion (£637 million) over the next year as it embarks on a corporate shake-up which could cull more than 1,000 jobs. It comes as an Iranian official in the Opec oil cartel said crude prices could plunge as low as $40 a barrel in the near future…

Article by Russell Lynch published by The Independent Wed 10 Dec 2014: BP unveils $1bn restructuring amid plunging oil prices

Extracts

Oil giant BP has said it will rack up costs of at least $1 billion (£637 million) over the next year as it embarks on a corporate shake-up which could cull more than 1,000 jobs.

The FTSE 100 giant has accelerated its plans to strip costs out of the business in response to a dramatic plunge in crude prices since June. It is understood that BP, which has 84,000 staff worldwide and 15,000 in the UK, could shed more than 1000 staff by the end of the process.

It comes as an Iranian official in the Opec oil cartel said crude prices could plunge as low as $40 a barrel in the near future if divisions among the producers widened.

Opec decided against production cuts two weeks ago to maintain market share for the cartel, which accounts for about 40 per cent of global oil output. Brent held its ground above $66 a barrel today.

In an investor presentation today, BP also signalled it could cut capital spending next year by more than the $1-$2 billion previously guided in October, “recognising the current outlook for oil prices”.

FULL ARTICLE

RELATED

BP to Cut Jobs as Price of Oil Falls: The New York Times: A version of this article appears in print on December 11, 2014, on page B3 of the New York edition

Extracts

The company said that it did not yet know how many people would be let go, but that most of the money would go to severance packages. With the amount of money earmarked, that could mean thousands of job cuts. BP had 84,000 employees worldwide at the end of last year.

The price of the international benchmark, Brent crude, was down more than 1.5 percent on Wednesday to about $65.32. It is now down more than 40 percent since June.

Analysts say that other companies are likely to follow BP’s cost-cutting example. Oil companies including Royal Dutch Shell and Total had already been reining in spending on their projects and selling off properties in response to investor complaints about soaring costs and diminishing returns.

The squeeze is only just beginning, analysts say. “There will be even more pressure on the financials of the main operators,” Martijn Rats, an analyst at Morgan Stanley in London, said in an interview.

Oil price plunge means survival of fittest: Financial Times: 10 Dec 2014

he 40 per cent plunge in the price of oil over the past six months is testing the mettle of the world’s biggest producers, from Venezuela to Iran and Russia. But it is also a survival of the fittest at a more granular level — among the world’s megaprojects.

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BP caught between value over volume and falling crude prices: Financial Times: 10 Dec 2014

If energy is turning into a game of shrink to survive, BP is ahead of its rivals. The tens of billions of dollars in disposals — including rigs, platforms and pipelines — that followed the disastrous Gulf of Mexico oil spill in 2010 have reshaped the oil and gas giant.

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No bottom in sight for oil prices: CBS News: 10 Dec 2014

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Much of the drop in oil prices is due to the ongoing North American oil boom, as producers in Canada and the U.S. bring vast new supplies of oil and natural gas to the international energy market.

FULL ARTICLE

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