BP to cut 4,700 jobs and 3,000 contractor roles to reduce costs

LONDON – BP is eliminating 4,700 positions, about 5 per cent of its workforce, and more than 3,000 contractor jobs, chief executive Murray Auchincloss told staff on Jan 16 as the London-based energy giant seeks to reduce costs.

More cost-cutting efforts are planned for this year and beyond, he said.

The company has stopped or paused 30 projects since last June to focus on those that make the most money. A digitalisation drive, including pushing artificial intelligence across departments, is key to these plans, he noted.

As for which offices and job functions are affected by the cuts, a spokesperson from BP told The Straits Times that they would not be “giving breakdown by country, regions or businesses”.

BP has fallen further behind its fellow oil majors during Mr Auchincloss’ tenure as CEO and is now worth less than half as much as Shell.

It has even been overtaken by companies that were once just a fraction of its value.

Faced with this performance, investors want to see change.

The expectation is that Mr Auchincloss will announce in February a further shift back towards oil and gas though there are many questions about whether this can be accomplished quickly enough. 

The job cuts come days after BP announced it was delaying February’s strategy update and relocating it to London from New York to give him more time to recover from a medical procedure.

“I understand and recognise the uncertainty this brings for everyone whose job may be at risk and also the effect it can have on colleagues and teams,” he wrote in an e-mail to BP employees, which was provided to Bloomberg.

“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.”

Its fall in recent years reflects strategic miscalculations that extend far beyond Mr Auchincloss’ single year as permanent CEO.

His predecessor Bernard Looney embraced low-carbon energy, made a faulty prediction that global oil consumption had peaked and drove expensive forays into offshore wind – only to be fired for his personal conduct before the strategy could be realised.

BP has since been watering down Mr Looney’s strategy incrementally.

It slowed a planned reduction in its oil and gas output in February 2023, stopped or paused a series of clean hydrogen projects, and in December announced a spin-off of its entire offshore wind business.

But the company has resisted making the more forceful pivot back into fossil fuels that some investors have been demanding.

It has repeatedly reassured shareholders that it has enough untapped resources to fulfil its production plans, yet since 2020 it has given the green light to just one major oil project – the Kaskida field in the Gulf of Mexico.

This long period of upstream neglect will make it more difficult to achieve a quick turnaround, analysts say.

The company aims to cut costs by US$2 billion (S$2.7 billion) by end-2026. Its net debt was about US$24 billion at the end of the third quarter. BLOOMBERG