Oil majors BP and ConocoPhillips will cut over 500 jobs in the North Sea to reduce costs as oil prices tumble. As Ciara Lee reports other oil majors are also cutting back with billions of dollars of projects being put on hold.
It's one of the world's most expensive exploration areas. But BP's plans to cut around 300 jobs from its 4,000 strong workforce in the North Sea comes as oil prices are at record lows. BP says the layoffs are part of a previously announced 1 billion dollar restructuring following a major assets sell off. But Brent crude at 48 dollars a barrel after a 60 percent fall in prices over six months won't be helping says CCLA's James Bevan. (SOUNDBITE) (English) CHIEF INVESTMENT OFFICER AT CCLA, JAMES BEVAN, SAYING: "The collapse of the oil price from the high ceiling last year is bad news for all the oil majors. BP will inevitably have to cut costs. I have to say I think the cutting of costs and employment numbers in the UK will just be the start of a rather prolonged period of retrenchment." Fellow North Sea producer ConocoPhillips is also cutting 230 jobs in Britain. And rival oil majors Royal Dutch Shell announced job cuts in the area last year. Dan Jackson is from IO Investment. (SOUNDBITE) (English) DAN JACKSON, CEO OF IO INVESTMENT, SAYING: "It's readjusting itself to a new environment. The oil price is the latest blow to an industry that's been changing significantly in the last two years." Projects too are being axed. Qatar Petroleum and Shell have abandoned their 6.4 billion dollar petrochemical project in the Gulf state. And Africa-focused producer Tullow Oil has written off 2.3 billion dollars in exploration work and some of its assets. CHIEF INVESTMENT OFFICER AT CCLA, JAMES BEVAN, SAYING: "What we are seeing in big picture terms is a transfer in power from producers to consumers. So economies that import oil and spend money on oil and related products are going to benefit. Those that are exporting and producing are clearly not going to benefit. They will lose at a company level. Therefore I do think there is a big transfer of power from those that are dependent on oil and commodities, to those that are big consumers. So great news for companies like Fedex." The oil and gas sector is a vital part of Britain's economy. It employs over 400,000 people and has brought more than 200 billion dollars in tax revenues to the government. News of the most recent job cuts will likely rattle the country's politicians gearing up for elections in May.