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Saturday, February 24, 2024

Oil service firms warn of more job cuts

Aibel and National Oilwell Varco are among oil and offshore companies warning of more job cuts, with hundreds of employees likely to soon be out of work. It was the latest bad news to hit the industry, at a time when analysts are also warning of more bankruptcies in the sector.

“It’s serious that we have to cut so many positions,” Bjørg Sandal, communications director at  Aibel, told NRK Rogaland on Monday. After eliminating around 800 jobs over the past two years, Aibel executives said another 500 would disappear, 235 of them at the Stavanger home office. Aibel, a leading oil service company, also has operations in Oslo, Haugesund, Bergen, Kristiansund, Stjørdal, Harstad and Hammerfest, along with Thailand, Singapore, the UK and Denmark.

“There are various jobs that will be cut, but most of them are in the area of the company’s core competence, engineering,” Sandal said. “We don’t have any volunteer programs either, like other companies have.” Employees will simply be laid off, with no hopes of being spared because someone else voluntarily resigns.

The reason for the looming cuts was the same facing so many other companies that cater to the oil sector: “We have too many employees in relation to the volume of work the company has,” Sandal said. Since oil prices plummeted from record high levels, oil companies have dramatically cut back on investment and operations, and haven’t needed the services of companies like Aibel.

The situation at National Oilwell Varco (NOV) in Kristiansand is much the same, with the company also announcing on Monday that more jobs were on the line. NOV officials couldn’t say how many people will lose their jobs this time.

Some analysts now fear a wave of bankruptcies in the oil service business. Newspaper Finansavisen reported on Monday that 24 of oil service firms listed on the Oslo Stock Exchange have lost as much as 90 percent of their share value. The stock market dives are directly tied to the low oil prices and overcapacity in the markets the companies serve.

“Many will undergo restructuring and some will go bankrupt,” Hans Thrane Nielsen, a funds manager at Storebrand Kapitalforvaltning told Finansavisen. “At the same time, it’s probably in this sector that we’ll also see stock market winners five years from now.” Berglund



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