BP Cutting 500 North Sea Jobs

BP said Friday that it will cut 500 jobs, or about 16% of its employees located in the United Kingdom. The staff cuts will take place mid-2002. The company said the layoffs were necessary to safeguard the future of its investment in the North Sea. "Streamlining our business now is critical if we are able to create a successful and sustainable future," BP said in a statement. "We also need to reverse the current trend of rising costs," it added.

With oil production in the British North Sea having peaked in 1999, BP has found itself spending more to extract fewer barrels of oil. BP's U.K. costs are reportedly rising at 8% annually, almost four times higher than the domestic inflation rate.

BP said 200 jobs will be lost from its Aberdeen office in Scotland, headquarters to its British North Sea operations. A further 300 jobs will be trimmed from onshore and offshore facilities around the U.K., it added. The company said it was confident "a large percentage of those...leaving the company will be able to do so voluntarily." Targeted onshore workers will leave their posts by mid-year, with offshore workers following by the end of the year, BP added.

The layoffs are the latest installment of a sweeping reorganization of BP's U.K. operations. Last year, the company announced 1,000 job losses at its Grangemouth crude oil refining and chemicals complex in Scotland, which analysts expect will achieve almost $125 million in costs savings.

BP is one of the biggest investors in the British North Sea and has committed to spend GBP700 million a year until 2004. The company said that wouldn't change, despite the trimming of the workforce. More than 20% of its global production of roughly 3.5 million barrels of oil equivalent a day is drawn from the British North Sea. While natural gas production in the basin has grown in recent years, oil production has begun a sharp decline owing to depletion of reserves.