Oil giant BP is starting off the year with an unfortunate bang, with plans to cut more than 5% of its total workforce. The BP layoffs are expected to affect 4,700 workers of the overall 90,000 individuals who are employed at the organization globally. The company announced its intention to go on a cost-cutting mission last year, with an aim to simplify the business significantly by the end of 2026, so the news of the job cuts doesn’t come as a surprise.
In order to reach their savings goals, the BP layoffs will be integral to pairing down the workforce to the point where investments can be made into the digital capabilities of the company, especially at a time when AI and automation are leading the conversation across every industry.
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BP Layoffs to Ensue, Cost Savings Measures Take Priority
London-based oil giant BP has announced its intention to proceed with its job cuts, and as mentioned, this will include 5% of its workforce. Around 4,500 workers will exit the company with an additional 3,000 contract jobs slashed as well. The information was communicated to employees last week when CEO Murray Auchincloss shared an email with workers to inform them of the decision.
According to BBC, Auchincloss explained, “We have got more we need to do through this year, next year, and beyond, but we are making strong progress as we position BP to grow as a simpler, more focused, higher-value company.” The CEO also emphasized that it was “uniquely positioned to grow value through the energy transition,” but there was still room to keep improving the company’s competitiveness to allow it to keep moving at the pace of its customers and society.
These cuts are expected to occur among the office staff and not in operational roles or among those who work the petrol or service stations for the organization. Around 2,600 of the contractors affected by BP’s worldwide job cuts are believed to have exited their roles already.
BP Is Targeting $2 Billion in Savings by the End of 2026
Last year, in October, the international oil giant was able to identify $500 million of cost savings that it intended to deliver by this year. This was a quarter of the $2 billion (1.6 billion pounds) in savings it planned to ensure by the end of 2026. Recently, in a fourth-quarter trading update, the company stated that it expects to record impairment charges between $1 billion to $ 2 billion with upstream production expected to be lower than numbers seen in the third quarter.
For now, the company has redirected its attention to going all in on its “highest-value opportunities.” As a result, over 30 projects have been put on hold since June, according to the Associated Press. This has included the company’s move to withdraw from some of the renewable energy projects it invested in earlier. This does mean an end to the plans to cut the company’s oil and gas output by 40% by 2030, for now.
The business is now placing an emphasis on investing in digital capabilities that can help the organization in the long run. Over the years, BP has fallen behind its peers in terms of its overall value and share price. While Auchincloss’ predecessor Bernard Looney has been blamed for steering the company in the wrong direction and making predictions that did not eventually come to fruition, the company has still been slow to reverse his decisions entirely and leap back into the fossil fuel business with vigor.
As the company works on realigning its resources with its goals and ensuring it has enough power to ride through the challenges of the upcoming years, workers who are affected by the BP layoffs will have to set their sights on a different business where they can pursue their own growth.
