Why is oil giant BP cutting approximately 4,700 staff?

CGTN Europe

CGTN Europe interviewed Gaurav Sharma, Energy Analyst, Oilholics Synonymous

Transcript

00:00Let's look now to Gaurav Sharma, Energy Analyst from Oilholics Synonymous.

00:04Good to see you back on the program.

00:06So, given these high oil prices we've been seeing,

00:10why the need for these large-scale job cuts?

00:14Good to be back on the program, Robin.

00:16I think the problem is largely of BP's own making.

00:19Let's go back to sort of middle part of 2020

00:22when the world started recovering and so did the oil companies

00:25from the ravages of COVID.

00:27Between 2020 and 2023, according to my research,

00:31Chevron's price went up by 50%, ExxonMobil's by 85%,

00:36Shell by 26%, BP by a very paltry 7%.

00:41Why? Because the CEO at the time, Bernard Looney,

00:44decided to reimagine BP.

00:46Those were his words, not mine.

00:48And what sort of reimagination was that?

00:50Instead of sort of focusing on the fragile recovery

00:54that the commodities market was seeing,

00:56they started going for overpaying for renewables.

00:59Those problems have now come into the in-tray of his successor,

01:03hence the job cuts.

01:05Let's talk about that reimagination of BP.

01:08As you say, the former CEO wanting to focus more on green projects.

01:13Do you think the new CEO will stick with that plan?

01:17I don't think so.

01:19I think what he's doing is pretty much what also Shell is also doing,

01:23sort of returning, going back to basics,

01:25going back to sort of their core offering of oil and natural gas.

01:29I don't think he will, but at the same time,

01:32he will stick with some of the renewables ventures that they've done.

01:35That said, BP last year truncated a lot of its shares.

01:38It sold off its U.S. offshore renewables business.

01:41It tried to reimagine how it was going to approach retail points,

01:45fuel retail points.

01:47All of that is happening, and now this is the next phase,

01:49the next draconian phase of almost 8,000 job cuts.

01:534,700 staff, another 3,000 contractors,

01:56nearly 5% of its global workforce.

01:59So it's got this cost reduction target, hasn't it, BP,

02:02of $2 billion by the end of 2026.

02:05How is it going to achieve that?

02:07It must be more than job cuts, surely.

02:09Oh, absolutely.

02:11I think there's got to be efficiency savings elsewhere.

02:14I think what the markets are watching out for is that,

02:16I think of one-fourth of that $2 billion figure,

02:19it has to be achieved by the end of this year.

02:22And I think you will see reductions, cost reductions elsewhere,

02:25certain asset sales.

02:27But, yes, I think job cuts alone won't do the trick.

02:32Gaurav, great to talk to you.

02:33Thanks again for coming on the program.

02:35That's Gaurav Sharma, the energy analyst from Oilholics Synonymous.

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