Norway’s state oil company Statoil, faced with falling oil prices and rising costs, reportedly plans to cut another 500 jobs on its offshore platforms. More land-based employees may lose their jobs as well, as the country’s oil and offshore industry stops gushing.
Newspaper Dagens Næringsliv (DN) reported Friday that top Statoil executive Arve Sigve Nylund unveiled the new pending cuts at a meeting this week with the company’s bedriftsutvalg, the works council for management and unions. Around 500 workers on Statoil’s offshore installations will likely need to find something else to do, DN reported, while an unclear number of other Statoil employees may also need to leave the company.
The looming cuts come on top of the roughly 1,400 jobs eliminated so far as Statoil tries to slim down its organization after a long string of boom years. Statoil has stated it intends to realize NOK 8 billion (USD 1.3 billion) worth of “efficiency gains” annually within 2016.
The goal is to save around NOK 6 billion of that through more efficient operations to be outlined and carried out through a program called Step (Statoil Efficiency Project). The company aims to cut costs at drilling and well operations by 25 percent, reduce staff and streamline administration. Statoil has also cut its investment plans by NOK 30 billion over the next three years.
‘Working to improve productivity’
DN reported that the looming cuts have sparked irritation among the company’s labour organizations, which are countering with proposals of their own. More final job cut numbers are expected during the next week.
“There’s a formidable process of change going on in the company right now,” Frithjof WB Tønnessen, leader of the labour organization Tekna, told DN. “No one has a secure job anymore.”
A Statoil spokesman wouldn’t go into more detail about pending job cuts but told DN that “we’re working to improve productivity in the entire company. The improvements we’re working with now are expected to have a staffing effect of between 1,100 and 1,400 jobs, as earlier reported.”
Cuts throughout the industry
Statoil is far from alone in its cost-cutting efforts after the price of oil has fallen from more than USD 140 a barrel to just over USD 92 on Thursday. Dagens Næringsliv noted how many other companies in the oil and offshore sector are slashing jobs as well. Aibel is cutting another 230 jobs, bringing its total cuts up to 710, while GE Oil & Gas is eliminating 145 jobs. Companies including Aker, Bilfinger, North Atlantic Drilling, Western Geco, Baker Hughes, Beerenberg, FMC Kongsberg and Subsea 7 are all cutting as well.
The cuts have alarmed Norwegian authorities, who worry they can threaten safety on offshore installations because they’re also affecting maintenance and the companies that provide such services. The cuts are also bound to affect the entire Norwegian economy, according to experts.
Norway’s conservative government coalition is bracing for a downturn in offshore oil and gas activity and in the onshore oil services industry, though, even mentioning in its opening address in Parliament on Thursday that Norway’s “oil activity will no longer be the motor of our economic growth.” Calls have long gone out for the country to lessen its reliance on oil and devote more attention to development of renewable energy and other industries.