Exclusive: Only a quarter of BP's 10,000 job cuts to be voluntary
By Dmitry Zhdannikov and Ron Bousso
LONDON (Reuters) - BP is expected to make around 7,500 layoffs after around 2,500 employees - or just over one in ten beneficiaries - apply for voluntary severance pay. This comes from an internal memo from Reuters and company sources.
The oil major announced plans in June to lay off nearly 15% of its 70,000 employees as part of Chief Executive Bernard Looney's plan to cut costs and reinvent the business for a low-carbon future.
Most of the layoffs will come from employees in the office in BP's core oil and gas exploration and production division, where thousands of engineers, geologists and scientists will depart. They have no impact on the front line production facilities.
A BP spokesman confirmed the voluntary release.
"We continue to make progress in fully defining our new organization ... We expect the process to be complete and all employees to know their positions in the coming months," BP said in a statement.
The oil industry is facing one of the biggest crises of all time, with a collapse in demand and oil prices due to the COVID-19 pandemic and pressure from activists and investors to help fight climate change.
In an internal memo earlier this week, BP said that of 23,600 people eligible for voluntary layoff, about 2,500 had applied, including about 500 in senior positions.
"This means that around a quarter of the downsizing that Bernard described in June will be voluntary," the memo says.
"We know that for a variety of reasons, some people feel the time is right for them to leave BP - but it will still have been a difficult decision for many," the memo said.
Looney has promised to cut oil and gas production by 40% by the end of this decade, a radical promise for an energy company as it plans to drastically expand production of renewable energy sources like offshore wind and solar.
Investors have praised the drive, but they have also questioned the plan's financial viability, as renewable energies have much lower returns.
BP's shares are currently trading at their lowest level since 1995 when it was a much smaller company, and the dividend yield is a staggering 13%.
Voluntary layoffs have been offered to people in offices in 21 countries, according to BP. The largest offices are in London and Aberdeen in Great Britain, Houston in the USA, Baku in Azerbaijan, Luanda in Angola as well as Oman and Trinidad and Tobago.
Two BP sources said the company considers more than 10% of those eligible who accept voluntary dismissal to be a good turnout. As a rule, employees were offered a monthly salary for each year of service.
Forced redundancies are now based on internal ratings and rankings.
"Losers get a package and will get out by the end of the year ... The choice of staff is brutal," said one of the sources.
A second source said the biggest challenge is that the long-term workers are trying to fill new roles that require skills and knowledge of the renewable energy business.
"If you are an oil reservoir engineer, the chances that you will be retrained as a solar panel engineer are minimal," said the second source.
Gordon Birrell, operations manager for BP, which includes oil and gas production and refining, told Reuters earlier this week that many of the job cuts would come from his department.
"The transformation of production and operations is important, very important - 10,000 people are going to leave the company and we are in the middle of the process - a significant portion of the total is from production and operations," said Birrell.
Rival Shell also plans to cut up to 9,000 jobs.
(Reporting by Dmitry Zhdannikov and Ron Bousso; Editing by Mark Potter)
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