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BP Plc plans to cut 10,000 jobs as the coronavirus pandemic accelerates the company’s move to slim down for the energy transition.
The public health crisis has hit company earnings and forced many to change the way they operate. European competitor Royal Dutch Shell Plc is said to be offering voluntary redundancies in a bid to become leaner, and U.S. rivals Chevron Corp. and Marathon Oil Corp. are among others laying off employees.
BP will let go of 14% of its workforce, Chief Executive Officer Bernard Looney said in an internal note. The move will mostly affect staff in office-based jobs and those holding senior roles, with the top 400 positions expected to be cut by one-third.
Senior management will also not receive pay increases this year, while junior and mid-ranking staff will only get them from October. Employees at filling stations won’t be included in the reorganization as they’re considered front-line workers. Their wages rose in April and will climb again in August.
Looney, 49, told staff that the job cuts were in line with plans set out in February to prepare BP for deep reductions in carbon emissions. The pandemic and crude’s subsequent collapse have however accelerated the process, leading the company to “go deeper at this stage than we originally intended,” he said.
“We are spending much, much more than we make — I am talking millions of dollars, every day,” Looney wrote. “It currently costs around $22 billion a year to run the company — of which around $8 billion is people costs.” BP’s net debt rose by $6 billion in the first quarter of this year.
The company had committed to a three-month freeze on job cuts during the peak of the pandemic, starting in early March. Promotions were also frozen but will resume in July “in a measured way,” the CEO said. Cash bonuses for the year will be “very unlikely,” he said, without clarifying whether that extends to BP’s trading division. Staff will be able to apply for voluntary redundancy starting June 15.
In February, newly appointed Looney announced that BP’s upstream and downstream businesses would be replaced by 11 teams that would be more focused and integrated. He also pledged to make the company largely carbon-neutral by 2050.
More must-read energy sector coverage from Fortune:
- COVID-19 is crippling the energy market, with one big exception: renewables
- Why the coronavirus crisis could make Big Oil greener
- Buccaneers of the basin: The fall of fracking—and the future of oil
- The U.K.’s lockdown is making the country’s electricity grid greener—for good
- Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
- WATCH: Why the coronavirus crisis could make Big Oil greener
