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Shell cuts North Sea jobs

Oil giant Shell has announced it is to reduce the number of North Sea oil staff by 250 this year.

Shell will reduce the number of operatives in the North Sea as part of a wider range of initiatives to manage costs and improve competitiveness.

The move will affect staff based in Aberdeen and on installations in the North Sea. Workers were informed of the plans earlier today.

Shell’s upstream vice president for the UK and Ireland Paul Goodfellow said: “The North Sea has been a challenging operating environment for some time. Reforms to the fiscal regime announced in the budget are a step in the right direction, but the industry must redouble its efforts to tackle costs and improve profitability if the North Sea is to continue to attract investment.”

Lower oil prices have been welcomed by the transport industry and car owners. But last December there were concerns that falling oil prices could threaten the North Sea oil industry.

Service providers such as Schlumberger have already announced job losses and are reducing new recruitment.

Paul Goodfellow said it is important that the business is competitive and “changes are vital if it is to be sustainable.”

Much of the oil drilled in the North Sea now involves deep sea drilling which is expensive. In December the chairman of Brindex (the independent explorers’ association) Robin Allan said new projects in the North Sea would be unprofitable with oil below $60 a barrel. In their press release Shell said Oil and Gas UK warned that about 20% of production in the UK is not economical at $50 a barrel.

Oil prices rose 6% today as a result of turmoil in Yemen but they are still only around $60 a barrel.

If prices don’t increase we can expect further job losses in the oil industry and its related industries.

The fall in oil prices is good for transport and energy prices. But for those involved in the oil industry, whether they are Multi Nationals or small family businesses, these are worrying times.

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