Survey Shows Most Indonesian Upstream Firms Likely to Cut Workforce in 2016

Most upstream companies in Indonesia are likely to reduce their workforce this year given sluggish oil prices, according to a survey conducted by PricewaterhouseCoopers (PwC) Indonesia, as reported Friday by local daily The Jakarta Post.

The survey revealed that 91 percent of the respondents expected employment in the oil and gas industry to fall in 2016 as low oil prices continued to weigh on the sector.

“Almost 75 percent of the respondents expect their company to reduce their expatriate workforce, with 53 percent expecting a decline in the number of local hires,” Sacha Winzenried, PwC Indonesia’s lead advisor for energy, utilities and mining, said in Jakarta Thursday, as quoted by The Jakarta Post.

PwC Indonesia noted that the industry downturn will curb future upstream spending, particularly for exploration, compared to previous years. Only half of those surveyed expected their companies to increase exploration activities globally and in Indonesia in the next three years.

Turning to general capital expenditure (CAPEX), the results of the PwC Indonesia survey showed that those polled were evenly divided into three groups. A third expects a decrease in CAPEX, while the other one-third sees an increase and the remaining one-third do not forsee any change from existing levels.

According to data published on Indonesia's upstream regulator Special Task Force for Oil and Gas Business Activities (SKK Migas) website, there is an estimated 32,000 local oil and gas workers employed in the country's upstream petroleum sector.

Earlier this year, Chevron Pacific Indonesia, a unit of Chevron Corp., announced plans to lay off 25 percent or 1,500 of its 6,000 workers in the country in response to the global industry downturn.

"We urged (Chevron) to reduce the number of its workers naturally. If there's a retirement plan, then let it happened through that," I Gusti Ngurah Wiratmaja Puja, director general of oil and gas at Indonesia's Ministry of Energy and Mineral Resources said Feb. 2 in The Jakarta Post.

Chevron is the largest petroleum producer in Indonesia, averaging 176,000 barrels a day of liquids and 185 million cubic feet of natural gas per day in net production.

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