Subsea 7 to Cut Costs by $550 Million, Increases Vessel Reduction Plan
Subsea 7 announced Wednesday that it will cut costs by approximately $550 million by early 2016, confirming plans to axe employees and vessels first announced in May this year.
Although previous reports from Reuters revealed that Subsea would reduce their fleet by up to 11 vessels, the company stated in its half year results that it would be reducing its capacity by 12 vessels. Subsea 7’s plan to reduce its workforce by 2,500 people remains unchanged. The company expects to save around $400 million in employee related costs and about $150 million in vessel costs, as a result of its reduction program.
In a Subsea 7 press release, the company stated:
“The sustained downturn in oil company expenditure continues to result in lower industry activity and the timing of new awards to market remains highly uncertain. By balancing the implementation of its cost reduction program with a focus on maintaining its core in-house expertise and capability, Subsea 7 remains well positioned to continue to deliver its projects in a consistent and efficient manner and capture future business opportunities.”
The news follows fellow European oilfield services company Technip’s announcement earlier this month that it will lay off 6,000 of its 38,000 employees. These cuts will be implemented over the next 18 months, according to a Technip spokesperson. The restructuring plan is expected to save the company over $918 million, with around $775 million of this saving being delivered in 2016 and the rest in 2017.
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