By Jennifer Hiller
HOUSTON, Oct 30 (Reuters) - Oil and gas companies worldwide
are taking an axe to their employment rolls, shedding workers to
survive what is expected to be a prolonged stretch of weak
demand.
Exxon Mobil Corp said it will cut its workforce by
15%, or about 14,000 people, along with oil majors Chevron Corp
and Royal Dutch Shell Plc.
All told, more than 400,000 oil and gas sector jobs have
been cut this year, according to Rystad Energy, with about half
of those in the United States, where several big exploration
companies and most large oil service companies are
headquartered.
Coronavirus has devastated swathes of the global economy,
with energy, travel and hospitality among the industries hit
hardest. Energy companies were already struggling with weak
returns, particularly those operating in U.S. shale regions, but
have had to double down on cost cuts as investors pressure
companies to improve margins.
"The COVID-era reality across the oil industry is austerity
on an epic scale. There is no escaping the fact that this means,
among other things, job losses," said Pavel Molchanov, analyst
at Raymond James.
In addition to Exxon, Chevron Corp, Australia's Woodside
Petroleum Ltd and Canada's Cenovus Energy Inc
all announced plans in recent weeks to cut staff.
Global fuel demand slumped by more than a third in the
spring. While consumption has recovered somewhat, it remains
lower than a year ago with major economies resuming lockdowns to
contain the pandemic.
The downturn has been particularly harsh in the United
States, the world's largest crude oil producer. The nation has
recorded the most deaths from coronavirus, and the damage from
the pandemic has sent unemployment to about 8%.
U.S. Energy Secretary Dan Brouillette said it is unlikely to
return to the peak, near 13 million barrels per day, reached in
2019, largely through the use of fracking technology used by
shale companies. The shale industry has been hit hard by the
pandemic because it is easy for oil firms to cut staff and
spending in the sector.
Fracking has become a hot-button issue in the U.S.
presidential campaign. Democratic challenger Joe Biden wants to
limit fracking on federal lands, while incumbent President
Donald Trump has pushed for more drilling, and argues Biden's
position would destroy jobs.
Consolidation is helping drive job cuts. Chevron plans to
eliminate roughly 25% of the staff acquired with Noble Energy,
which it acquired this month. Shell said its oil output likely
peaked last year, and it plans to cut roughly 10% of its
workforce. Cenovus said it will cut 25% after it buys rival
Husky Energy Inc.
In Australia, more than 2,000 oil industry jobs have been
cut since March, including at Exxon and Chevron. Top independent
gas producer Woodside said earlier this month that it would cut
around 8% of its workforce.
Mohammad Barkindo, secretary general of the Organization of
the Petroleum Exporting Countries, recently expressed concern
that the pace of oil demand is below expectations, potentially
requiring major producers to maintain production cuts.
Not all companies are throttling back. PetroChina Co Ltd
, Asia's largest oil and gas producer, reported a
350% surge in profit from a year earlier.
In an outlook released earlier this month, BP Plc laid out
two scenarios that suggest world oil consumption, roughly 100
million barrels per day, peaked last year. BP Plc
recently cut about 50% of its exploration team as it shifts
operations towards renewable energy development.
Currently, futures markets suggest crude prices
may not advance beyond $40 a barrel for at least
two more years due to weak demand, and that could limit hiring.
"The practical reality is when you have oil prices in the
$30 to $40 range, I don't think many companies have the luxury
to wait for a recovery," said Alex Pourbaix, chief executive at
Cenovus.
(Reporting By Jennifer Hiller; Additional reporting by Ron
Bousso in London, Rod Nickel in Winnipeg, and Sonali Paul in
Melbourne; Writing by David Gaffen
Editing by Marguerita Choy)
