BP Freezes Employee Pay in Response to Oil Price SlumpNidaa Bakhsh and Zain Shauk
BP Plc, Europe’s third-largest oil company by market value, will freeze employee pay in the latest example of cost cuts as the world’s top oil companies respond to plunging crude.
The company “needs to take a number of measures in response to the harsh trading environment,” Chief Executive Officer Bob Dudley said in a memo to staff Monday. “One of the measures we are taking is a general freeze to base pay for 2015, with only a few exceptions.”
BP, which employs more than 80,000 people around the world, is the first global oil company to announce a pay freeze for staff. Oil has slumped to under $50 a barrel, less than half the price six months ago, forcing producers to review spending on new projects, reduce staff and cut costs.
More than 30,000 dismissals have been announced across the industry as companies slash budgets, according to a tally by Bloomberg News. Exploration and production spending is expected to drop by more than $116 billion, a 17 percent decline, because of falling crude revenues, according to an estimate from Cowen & Co.
BP offered 1,000 workers at its Trinidad and Tobago operations a voluntary separation program, regional manager Norman Christie said at a news conference on Monday. Earlier this month BP said it would cut about 300 jobs in the U.K.’s North Sea to cope with slumping prices and aging oilfields.
The Standard & Poor’s 500 Oil & Gas Exploration & Production Index has fallen 28 percent over the last six months as investors anticipated losses.
BP, which announces full-year earnings for 2014 next week, will review salaries as normal in 2016, Dudley said in the memo, the contents of which were confirmed by the London-based company’s press office.
Royal Dutch Shell Plc and Total SA are Europe’s largest oil companies by value.