Talisman Sinopec Energy to cut 300 North Sea jobs in wake of oil price crash

North Sea Oil & gas exploration and production company Talisman Sinopec Energy UK announced it would reduce its workforce by about 300 because of declining production, higher operating costs and plummeting crude oil prices.

Several energy companies have announced job cuts in the British oil and gas sector this year, including Conoco Phillips, Shell, Chevron and BP.

Talisman said it would be laying off 200 contractors and one hundred regular employees, from a total workforce of approximately 3,000.

Crude oil prices have fallen by nearly sixty percent since reaching a peak in June 2014. Oil & gas companies worldwide have been dramatically reducing their capital spending plans for 2015 and laying off staff.

Talisman Sinopc Energy job cuts

Talisman is one of several energy companies announcing North Sea oil job cuts this month.

Talisman says it will be closely monitoring its numbers and has implemented immediate reductions in contractor rates.

Paul Warwick, Talisman Sinopec managing director said:

“Our industry is operating in a mature environment, against a backdrop of a declining oil price and ever-increasing operating costs alongside falling production levels, reduction in exploration and asset integrity and maintenance issues.”

“We are not immune to those challenges and are taking appropriate actions to tackle them. We have spoken with our workforce and are supporting them through the process.”

The oil & gas industry needs to become more innovative and creative in order to manage mature assets and handle decommissioning projects more effectively, Mr. Warwick added.

Talisman Sinopec Energy UK, which is based in Aberdeen, Scotland, is a joint venture between Addax Petroleum UK Limited and Calgary-based Talisman Energy Inc. Addax is a wholly-owned subsidiary of the Sinopec Group (China Petrochemical Corporation).

Tax cuts and alarm

Chancellor George Osborne announced earlier this month that he was considering an emergency tax cut to halt the alarming decline in North Sea oil jobs and investments. He said he may include them in the March Budget. “I don’t want to pre-empt the Budget but I can see that it may well involve further reducing the burden of tax on investment in the North Sea,” Mr. Osborne added.

Chairman of the UK’s independent explorers’ association Brindex, Robin Allan, said in December that the oil industry in the UK was “close to collapse”.

Mr. Allan said:

“This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs wherever possible, and that’s painful for our staff, painful for companies and painful for the country.”

“It’s close to collapse. In terms of new investments – there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone.”

Unions warned in December that job losses in the North Sea oil industry could reach 35,000 over the next few years if drastic action is not taken immediately.