BP cuts jobs in Houston as it trims Gulf of Mexico business

HOUSTON – BP said Wednesday it is laying off employees in Houston to cope with falling oil prices, but refused to say how many of the local jobs will be cut.

The British oil giant’s cuts, concentrated on the support staff at its Houston offices, are part of an effort to simplify its business in the Gulf of Mexico, BP spokesman Brett Clanton said in an emailed statement. Some employees were notified this week they would be laid off, Clanton confirmed.

He said the firm expects all of its organizational changes to be completed by the end of the first quarter, with more layoff announcements to come in the next few weeks. The changes, he said, were reviewed with the company’s safety and operations team. BP had 7,200 employees in Houston in late June, when oil prices were higher.

“The current price environment has caused operators to look at their cost structure and undertake efforts to drive efficiencies,” Clanton said. “We are working at a rapid pace, while being thoughtful about the best ways to make safe and sustainable change.”

Headcount reductions in its Gulf business come the same day BP announced it sold around half of its equity stake in two major Gulf oil fields to Chevron Corp. Earlier this week, BP told employees it would freeze pay across the company this year. It also follows job cuts at Houston-based oil field service giants Schlumberger, Halliburton Co. and Baker Hughes, which have announced they let go 17,000 employees combined in recent weeks.

BP has divested more than $43 billion in assets in recent years to slim down after it incurred $42 billion in liabilities related to the 2010 Gulf of Mexico oil spill. But it didn’t fully adjust its organization structure and staffing in line with its sales and divestitures, Clanton said.

Late last year, BP said it would incur restructuring charges of $1 billion in the fourth quarter of 2014 through the end of 2015. The restructuring charges will stem largely from severance packages after the company makes thousands of layoffs around the world.

“We are clearly a more focused business now and, without diverting our attention from safety and reliability, our goal is to make BP even stronger and more competitive,” BP CEO Bob Dudley told investors last year.

Attorneys for the company are this week in a New Orleans courtroom arguing for lower federal fines for the Deepwater Horizon disaster. Prosecutors are seeking up to $13.7 billion in pollution fines for BP, owner of the blown-out Macondo well that spewed millions of gallons of oil into the ocean five years ago.

In court Tuesday, BP’s Gulf of Mexico regional president Richard Morrison said the London-based oil major’s U.S. oil unit, BP Exploration & Production, which owns 89 percent of the company’s assets in the Gulf, would likely have to spend less in capital expenditures this year because of falling oil prices.

Prosecutors and U.S. District Judge Carl Barbier cut him off before he could say exactly how much the company would have to cut in capital expenditures this year. The figure didn’t come up in court again Wednesday.

The oil spill trial, along with falling crude prices and worries over its 19.7 percent stake in Russia’s state-owned oil giant Rosneft, have battered the company’s stock price in recent months.

Earlier this month, BP had announced it would cut 200 onshore staff and 100 contractors at its North Sea operations in the United Kingdom. Reuters reported it would cut 255 jobs in Azerbaijan.

“The industry has been through an inflationary period that has reached an inflection point with the declining oil prices,” Clanton said.

U.S. oil settled down 8 cents on Wednesday at $44.37. That’s down from its 2014 peak of $107.26 on June 20.