BG Group warned of further job cuts and budget slashing yesterday as it also revealed it had wiped £4billion off the value of oil and gas assets globally to reflect the sharp fall in crude prices.
UK North Sea output was up by about 5% in 2014 as BG slumped to pre-tax losses of £1.5billion, from profits of £2.58million a year earlier. Revenue and other income was 2% higher at £12.9billion.
Ernst den Hartigh, managing director of European exploration and production, said: “We safely increased production for a second successive year. Our priorities for 2015 are to complete the offshore investment campaign we started last autumn and ensure we reduce operating costs to a more sustainable level.”
BG Group, which has about 500 people working out of its Aberdeen offices, said it needed to shave 10% off headcount costs among its 5,200 strong global workforce in 2015.
Executive chairman Andrew Gould painted a gloomy picture for prospects in the North Sea, which he said was unlikely to enjoy a resurgence in light of the recent plunge in oil prices.
Any tax breaks introduced by Chancellor George Osborne in his next Budget would help the UK industry but the long-term outlook was poor, he said.
He added: “I really don’t think the future of the North Sea is a discussion on the operating costs. It is a discussion based on the reserve left in mature fields.
“Anything the government does to reduce the immediate tax burden will stimulate investment but I don’t think you can, at these (oil) prices, expect a major resurgence.
“There are a lot of other places in the world where the reserve life is a lot more promising.”
BG Group’s latest crackdown on headcount costs, including but not solely through job cuts, comes after a 15% cull of the workforce last year.
About 300 jobs were shed at the group’s headquarters in Reading.
The firm also plans to slash its capital expenditure to between £4billion and £4.7billion this year, compared with the £6.2billion spent in 2014.
It is targeting a 2015 production level of between 650,000 and 690,000 barrels of oil equivalent per day, up from 630,000 last year, betting on increases from Brazil and Australia.
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