British energy company, BP, will be slashing about 10,000 jobs as it has witnessed a sharp decline in demand for oil, following the pandemic. According to Bernard Looney, CEO, BP, the Company will be asking 15 per cent of its workforce to leave, by the end of 2020. Office staff will face the maximum brunt.
This announcement was made via an e-mail sent to the 70,000 strong workforce of the multinational oil and gas company, which has its headquarters in London.
Oil prices have dropped so low that BP is struggling to make profits. Not only have companies across the world pulled back demand due to the lockdown, but even the aviation sector had no demand for oil, with planes being grounded for months.
After momentarily turning negative, the prices of oil have started to recover now, with lockdown being lifted in many locations, and restrictions being relaxed by governments to allow businesses to resume operations in phases.
However, according to Looney, the plan to downsize has been under consideration for some time now, as BP has been aiming to be a “leaner, faster-moving and lower carbon company.” The present crisis, which has seen the organisation incurring more costs than earnings, has only speeded up the decision. The Company is expected to cancel increments for its senior employees this year and also skip giving cash bonuses.
Apparently, BP’s net debt has risen by $6 billion in the first quarter. Running the organisation costs about $22 billion a year, and these cost-cutting measures are aimed at reducing operating costs by about $2.5 billion in 2021.