BP announced on Thursday its intention to cut approximately 4,700 jobs from its global workforce, equaling over 5% of its total employees, as part of a significant cost-cutting initiative. The London-based energy giant, which employs around 90,000 people globally, will also reduce around 3,000 contractor roles, marking one of the largest reductions the company has undertaken recently.
Chief Executive Murray Auchincloss outlined the job cuts in an internal memo to staff, voicing his recognition of the uncertainty such news brings for employees. "I understand and recognize the uncertainty this brings for everyone whose job may be at risk, and also the effect it can have on colleagues and teams," he wrote, emphasizing the range of support available for affected employees.
The cuts are part of BP's multi-year strategy to save at least $2 billion (£1.6 billion) by the end of 2026, aimed at enhancing returns and addressing investor concerns over the company's strategy relating to energy transition. Auchincloss noted, "We have got more we need to do through this year, next year, and beyond, but we are making strong progress as we position BP to grow as a simpler, more focused, higher-value company."
While the company has not disclosed the specific number of job losses by country, it has approximately 14,000 employees based in the UK, with around 6,000 working at petrol and service stations set to remain unaffected by the cuts. These changes come as BP emphasizes its commitment to strengthen its oil and gas operations, downsizing its renewable energy investments, including the spinning off of its offshore wind business.
Since June 2024, BP has halted or paused about 30 projects as it seeks to streamline operations. Auchincloss remarked on the importance of focusing resources on high-value opportunities, indicating potential for more job reductions as the strategy rolls out: "This accounts for much of the anticipated reduction this year."
The backdrop of these layoffs follows the abrupt resignation of Auchincloss’s predecessor, Bernard Looney, who left the company after failing to disclose personal relationships with employees. The managerial change instigated scrutiny over BP's energy transition strategy and its overall financial health, leading to Auchincloss's renewed emphasis on simplifying the company's structure.
Recently, BP's stock has felt pressure, dropping approximately 20% since last spring, alongside broader concerns about its long-term strategy moving away from fossil fuels. Analysts have expressed doubts about BP's ability to maintain competitiveness against rivals like Shell and ExxonMobil amid these shifts.
Investors responded to Thursday’s announcement with cautious optimism, leading to BP shares rising by 1.8% during trading hours. The company plans to convey its comprehensive strategy at an upcoming capital markets event, previously set for February 11 but postponed to February 26 to allow Auchincloss adequate recovery from surgery.
Faced with investor anxieties about its commitment to renewables, BP recently reversed several of its ambitious climate goals, abandoning plans to cut oil and gas output by 40% by 2030. This retreat mirrors its strategic shift, centering more on its traditional energy offerings rather than diversifying heavily toward green solutions.
Despite the layoffs, Auchincloss remains optimistic about the company’s potential for growth, stating: "We are still uniquely positioned to grow value through the energy transition," showcasing BP's commitment to finding pathways to profit even as it navigates the challenging waters of public and investor expectations.
With energy prices continuing to fluctuate and the market demanding adaptability, BP's current restructuring path raises questions about the future of the company's workforce and its ability to lead within the shifting energy sector. These planned layoffs are expected to conclude this year as BP seeks to fortify its position against both internal challenges and external market pressures.