Oil giant BP is asking its contractors and suppliers in its North Sea business to work with it to identify ways to reduce costs and improve efficiency after being hit by lower crude prices.
However, the company has not identified any specific level of reduction in costs being sought, or an exact timeframe for these reductions to come into effect.
A BP spokeswoman in Aberdeen said yesterday: “Since 2004, our costs have risen by 50%, but the oil price has now returned to the 2004 level. At the current oil price, our North Sea business isn’t sustainable. We need to take action now to protect investment, activity levels and jobs.”
The spokeswoman said suppliers and contractors had not been asked to rebid for existing contracts.
“We are asking them to look at all options for reducing costs,” she added.
She also confirmed there was now a recruitment freeze in the North Sea business in all areas, apart from the annual graduate and apprentice technician intake.
Meanwhile, it emerged last bmonth that more than 1,000 North Sea contractors were to see their pay cut by an average of 10% as oil companies felt the impact of lower crude prices.
The wage reductions affect oil service business Wood Group Engineering (North Sea). Pay cuts are on the way on March 1 for the contractors – both self-employed workers and agency workers – at the engineering unit.
A spokeswoman for Wood Group said at the time: “Wood Group Engineering (North Sea) continually reviews contractor rates and, over the last three to four years Market forces led to significant increases in contractor rates to the point where current levels are unsustainable.”
Those affected work onshore and most of them are in Aberdeen and Glasgow.
There will be no impact on the salaries of Wood staff.
Wood chairman Sir Ian Wood said about the pay cut: “It is regrettable but an understandable reaction at a time when this (the North Sea) is such a heavy cost production area.”
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