Being faced with redundancy in 23 days time, it is interesting to sit back and look at how various supermajors have reacted to the global economic crisis and the collapse of the oil price:
The head of US supermajor ExxonMobil said today the company is not planning to shrink its staff or cut back on investment because of the global economic downturn.
Boss Rex Tillerson said the world’s largest publicly traded oil company expects to spend $129 billion on new projects over the next five years.
That figure “spans across the entire scope” of the Irving, Texas-based company’s business, including oil and gas exploration as well as refining, he said in an Associated Press report.
“Our business plans are developed with a very long view in mind,” Tillerson said after the inauguration of a liquefied natural gas plant in the Persian Gulf state of Qatar. “So the fact that we’re in a temporary economic downturn, and it will be temporary; it will turn, really does not affect our business plans at all.”
“In terms of our employment levels, no change,” he said today. “We’re still hiring.”
Oil majors are making a big mistake if they cut staff and shelve projects because of low oil prices, Total chief executive Christophe de Margerie has warned.
He has no plans to do so, and told Upstream in an exclusive interview that the French giant has the financial health to weather the economic slump and benefit when oil prices eventually pick up.
“In our industry you cannot have a stop-and-go policy. You cannot say ‘I’ll invest when the price of oil is high and I stop when the price is low’,”he said.
“It is very important that we continue to invest. It will be good for everybody because it will limit the risk of shortage when the economy restarts, and it will be good for the company because we will get the benefit of the higher price.”
However, one thing de Margerie is not planning, is to cut staff. Many players in the oil industry have in previous downturns reduced staff levels, only to struggle to find qualified personnel when times got better. Only last month, Conoco- Phillips said it would remove 1200 jobs from its workforce.
“How can you say you want to keep a long-term investment strategy, and then destroy what is of value? What is of value for a company is its employees. Without your people you cannot do this. We need skills more than ever,”de Margerie said.
Royal Dutch Shell Plc may trim its workforce with a plan to leave vacancies unfilled and to “ruthlessly” review its use of contract staff, according to an internal email seen by Reuters.
The email, sent by a senior executive in Shell’s core exploration and production division, told managers “the world has changed” after crude prices collapsed from over $147/barrel in July to around $40/bbl now.
“Do not fill vacancies … Reconsider how hard to hold on to securing current staff that may be on the fence re. retirement,” Chris Haynes, Vice President Technical, EPT Projects said in the email.
Contract staff, on which Shell, like other oil companies, relies heavily to help operate its facilities, are to be targeted in the cost-cutting drive.
“Ruthlessly review third parties costs … Review necessity of contract staff as contracts expire, renew by exception only.”
With oil now reasonably settled around $45-$50 per barrel, hardly a disastrous price, it looks as though somebody has panicked. So much for 25-year visions and long-term planning. A two week flirt at $35 per barrel and the whole lot goes out the window.