China's Fourth-Largest Oil Producer Said to Cut Pay, InvestmentBloomberg News
Shaanxi Yanchang Petroleum Group delaying salary payments
Company will cut spending this year by 20% to 24 billion yuan
Shaanxi Yanchang Petroleum Group, China’s fourth-biggest oil producer, is cutting investments and salaries because of the oil price crash, according to people with knowledge of the matter.
The company will reduce executive pay by 10 percent until December and will delay paying salaries for six months, according to the people, who ask not to be identified because the information isn’t public. It’s also delaying half or all salaries and bonuses to non-executive employees for up to six months, as well as cutting spending 20 percent to 24 billion yuan ($3.7 billion), the people said.
The crash in oil prices has punished producers from Beijing to London to Houston, forcing companies to slash spending, scale back exploration, write down assets and layoff workers. Brent crude, the global benchmark, has lost more than 60 percent in the past two years.
Shaanxi Yanchang Petroleum had 115,600 employees at the end of 2014, according to its website. No one answered two calls to the company’s general line seeking comment.
China’s industrial sector has been pummeled as the economy slows and shifts away from heavy industry and manufacturing. The petroleum industry so far hasn’t been targeted for the same layoffs that threaten coal miners and steelmakers as the country’s oil demand continues to rise.
The company produced about 12.4 million metric tons crude (about 91 million barrels) last year, according to SCI International, a Shandong-based researcher. That compares with 410 million barrels for Cnooc Ltd., the country’s third-biggest producer.
PetroChina Co., the country’s largest oil and gas company, sees output falling the first time in 17 years as it shuts high-cost fields, Wang Dongjin, the company’s president, said last week after the reporting the lowest profit since it began trading publicly. Redundant workers will either be transferred to other positions or offered early retirement, he said.
— With assistance by Steven Yang