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Thursday, June 13, 2024

Statoil eyes new cuts in North Sea

Norwegian oil company Statoil will have slashed its costs by around NOK 2.5 billion a year when it wraps up its so-called STEP efficiency program at the end of the year, but it’s not enough. Now the company is turning its attention to its North Sea oil installations, which have been shielded from much of the cost-cutting, and offshore crews are worried.

Statoil CEO Eldar Sætre, shown here visiting an offshore platform himself, remains under pressure to cut more costs. Now the company is studying its offshore staffing, making platform workers nervous. PHOTO: Statoil
Statoil CEO Eldar Sætre, shown here visiting an offshore platform himself, remains under pressure to reduce costs in a climate of much lower prices. Now the company is studying its offshore staffing, and that’s making platform workers nervous. PHOTO: Statoil

Statoil, which announced much worse second-quarter financial results than expected on Wednesday, employs around 5,000 people on its Norwegian oil and gas platforms. Newspaper Dagens Næringsliv (DN) reported on Thursday that they may be the targets of more staff reductions.

“I’ll never shield anything (from cost-cutting),” Statoil CEO Eldar Sætre told DN after revealing the poor quarterly results that sent the company’s share sliding.

DN reported that the company is already working on a review of its offshore crewing practices. Statoil plans this fall to decide upon the “dimension” of how platforms are staffed. There’s been no official announcement that the goal is to reduce the numbers of people working offshore. The stated goal is to merely ensure “the most appropriate and suitable organization.”

Rumbling in the ranks
Employee representatives at Statoil are uneasy. They fear jobs will be on the line, as they have been elsewhere throughout the Statoil organization, where staffing has been cut by around 20 percent since 2013.

“When they (management) start up this kind of work, it’s not just to look out the window,” Bjørn Asle Teige, an employee representative for Statoil workers organized in the labour union Safe, told DN. “We have a fear that something else is coming.”

Teige is already warning management in the strongest of terms against making any changes in the way Statoil’s offshore crewing is organized. When Statoil tried to change the operating model after merging with Hydro’s oil and gas division, results were mixed. Production efficiency declined and the reform was ultimately reverse, Teige claimed.

Per Helge Ødegård of the labour organization Lederne-Teknikerne at Statoil also warned against changes. “They need to be careful about touching the support beam on the Norwegian shelf,” Ødegård told DN.

Management under pressure
Sætre and his fellow managers, however, are under severe pressure to continue operating profitably after oil prices have fallen to less than half their level two years ago. With the price of North Sea crude well under USD 50 a barrel this week, the NOK 2.5 billion in cost cuts so far aren’t enough. Nor are the moves announced this week to also cut Statoil’s investment budget by another billion kroner. Many analysts following Statoil expect more cost cuts next year.

Sætre said that when the STEP program ends, the company will work more from “bottom to top” instead of the other way around. DN reported he was careful about commenting on the prospects for offshore staffing.

“We see that some fields will eventually be closed, while we get other new fields in our portfolio,” Sætre said, adding how the Gina Krog and Aasta Hansteen fields are “on the way.” He says that gives Statoil “an opportunity, a degree of flexibility, to look at the total dimensions, and (make sure) that we have a sensible operations with appropriate and suitable staffing for the future.” Berglund



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