BP to Spend $1 bln on Thousands of Job Cuts

BP to review 2015 spending cuts amid falling oil prices.

BP will cut thousands of jobs cut across its global oil and gas business by the end of next year in a $1 billion restructuring programme announced on Wednesday following steep falls in oil prices. The British oil major said it was also considering deeper cuts to its 2015 budget beyond the $1-$2 billion reduction already announced in October, as a result of the oil slump. "Given the recent position taken by OPEC and with oil prices where they are today, we will continue to review this further," BP head of upstream Lamar McKay said in a presentation during an investor day in London.

The bulk of the restructuring costs will go towards staff redundancies in all segments, including oil exploration and production, refining and trading and administration, a company spokesman said. BP said a first charge will be taken in the fourth quarter of 2014 as it implements a plan drawn up over the past 18 months to increase efficiency. "We expect the group to incur about $1 billion of non-operating restructuring charges over the next five quarters, including the current quarter," the company said.

Thousands of BP's global work force of around 84,000 are expected to lose their jobs, sources said. BP is in the midst of a cost cutting drive that saw it sell over $43 billion worth of assets to cover the expense of the 2010 Gulf of Mexico oil spill and the oil sector's rising costs.

The sharp drop in oil prices, which fell from around $115 a barrel to around $65 a barrel since June, has piled further pressure on BP and its peers as revenues tumble. By 1306 GMT, BP shares were down 0.32 percent at 404.65 pence per share, compared to a 0.06 percent decline in the Stoxx 600 oil & gas index. McKay did not give any details on possible project delays or cancellations, saying new oil projects were sanctioned at $80 a barrel, but were also tested at $60 a barrel.

Global oil and gas exploration projects worth more than $150 billion are likely to be put on hold next year as plunging oil prices render them uneconomic, data shows. Deutsche Bank on Wednesday upgraded BP shares to buy, quoting "positive change in perception" over the impact of Russian sanctions and the Gulf of Mexico spill.

By Ron Bousso