Over 1 Million OFS Job Cuts Likely in 2020
More than one million jobs in the oilfield service industry (OFS) are likely to be cut in 2020 due to low project volumes brought about by the virus pandemic and the ongoing oil price war.
That’s according to a new Rystad Energy impact analysis, which reveals that shale services will bear the biggest brunt of the job cuts.
Over five million people are currently employed in the OFS sector globally, according to Rystad. The company estimates that contractors will scale down their workforce by at least 21 percent overall this year and has attributed 13 of these percentage points to oil price driven cuts and the remaining eight percent to virus driven cuts.
Rystad outlined that the shale OFS workforce and the OFS workforce in other onshore operations is estimated to be reduced by 32 percent and 17 percent in 2020, respectively. The offshore OFS workforce is likely to be reduced by 19 percent this year, according to Rystad.
“Low oil prices are likely to persist in 2021 and could lead to further workforce reductions,” Audun Martinsen, Rystad Energy’s head of oilfield service research, said in a company statement.
“But as we move into the second half of 2021, with better market fundamentals and a fading Covid-19, recruitment is likely to pick up in the shale sector and from 2022 will also kick-off in the offshore sector,” he added.
In the downturn of 2015 and 2016, the total OFS workforce was reduced by nearly 30 percent from its 2014 levels, Rystad highlighted.
Rystad is an independent energy research and business intelligence company headquartered in Norway. Last week, the company outlined that more than 200 OFS firms in Europe could go bankrupt. Rystad expects the effect of the pandemic to hit Europe’s OFS market “hard” and cut purchases by about $5 billion year on year.
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