BP to cut 3,000 downstream jobs, Q4 petchems profit up

LONDON (ICIS)–BP is to cut 3,000 jobs in its downstream operations as oil price woes continue to bite, the UK-headquartered energy major said on Tuesday.

The cuts are on top of a previous announcement from BP of 4,000 lay-offs in its oil and gas businesses.

Despite going some way to alleviate BP earnings falls in 2015, as petrochemicals margins widened on falling crude prices, cost-cutting by the oil and gas firm has led to the decision to cut staff and contractor roles in the downstream segment by the end of 2017.

Headcount cuts for the upstream division are expected to be completed by the end of 2016, BP added.

The company booked $2.6bn in impairment charges for the fourth quarter of the year, causing group underlying replacement cost profit to fall to $196m compared to $2.24bn in during the same period in 2014.

“We are continuing to move rapidly to adapt and rebalance BP for the changing environment. We’re making good progress in managing and lowering our costs and capital spending,” said BP CEO Bob Dudley.

The overall downstream segment’s underlying replacement cost profit before interest and tax rose by 0.41% year on year to $1.22bn in the fourth quarter.

However, division performance was weaker than during the third quarter of the year, when underlying replacement cost profit stood at $2.30bn, indicating that growth may be slowing for downstream business as well as upstream.

For the full year of 2015, the downstream unit’s underlying replacement cost profit before interest and tax rose by 60% year on year to $7.55bn.

BP’s petrochemicals business reported an underlying replacement cost profit before interest and tax of $36m in the fourth quarter, reversing the $25m loss in the same period of 2014.

For the full year, the petrochemicals unit posted an underlying replacement cost profit before interest and tax of $166m, compared with a loss of $49m in the corresponding period of 2014, it said in a statement.

“The results for the quarter and full year reflect improved operational performance and benefits from our simplification and efficiency programmes leading to lower costs,” it said.

The company is attempting to restructure to adapt to slumping oil prices, which have fallen from over $100/bbl in mid-2014 to close to $30/bbl for Brent crude and WTI this week.

“Should current conditions persist for longer than anticipated, we expect that all the actions we are taking will capture more deflation and so drive the point at which we balance our organic sources and uses of cash lower than the $60 per barrel that we indicated at last quarter’s results,” Dudley added.

Overall group net loss for the quarter was $3.31bn, a narrower loss than the $4.41bn posted in the fourth quarter of 2014, but full-year 2015 losses stood at $6.48bn compared to $3.78bn profit for 2014.

(re-leads, adds headcount reduction, group performance details, updates throughout)