Over 4,000 North Sea oil rig jobs cut to halt spread of Covid-19
The North Sea’s workforce has plummeted 40 per cent over the last fortnight as oil companies seek to limit the spread of Covid-19.
Over 4,000 jobs have been cut according to Oil and Gas UK, among growing concerns that oil rigs could become hotbeds of coronavirus infection.
The number of North Sea workers usually stands at 11,500. Now a skeleton staff of just 7,000 are left operating oil and gas platforms.
The reduction in staff numbers mainly affects non-essential contractors, so North Sea companies can keep workers distant during the pandemic and cut costs amid the oil downturn.
A number of major oil companies have announced spending cuts this week after the UK went into lockdown.
Cairn Energy is the latest operator to announce “significant reductions” to its capital expenditure across its North Sea producing assets.
The Edinburgh-headquartered company told investors today it had stripped $20m from its North Sea spending plans to $45m.
Cairn also plans to reduce expenditure on exploring for new oil and gas reserves by a third, to $100m.
But the layoffs are set to hurt the engineering and equipment services sectors that support major oil and gas operations.
Weir Group, a FTSE 250 engineering services firm, announced it would cut its dividend on Thursday as oilfield service companies brace themselves for the downturn.
Marine engineering services company James Fisher & Sons followed suit as it scrapped its dividend. It also cut board member pay by a fifth to offset the potential impact of Covid-19.
“Whilst group trading in the first two months of 2020 is ahead of prior year, the potential impact of Covid-19 is difficult to predict with any degree of certainty,” James Fisher & Sons said in a statement.
Meanwhile the general secretary of offshore union RMT Mick Cash has criticised oil and gas companies for “unilaterally sending staff home with no regard to their future income, work or health.”
Cash said there were “gaping holes” in the government’s response to the Covid-19 crisis offshore.
Rystad Energy has projected that over 1m jobs in the global oilfield services industry will be lost due to the impact of coronavirus and the ongoing oil price war.
The consultancy predicts that companies will cut eight per cent of workers due to oil price-driven cuts and 13 per cent due to the Covid-19 outbreak.
Rystad Energy’s head of Oilfield Service Research, Audun Martinsen, said: “Low oil prices are likely to persist in 2021 and could lead to further workforce reductions.
“But as we move into the second half of 2021, with better market fundamentals and a fading Covid-19, recruitment is likely to pick up in the shale sector and from 2022 will also kick-off in the offshore sector.”