BP to cut 4,700 jobs and 3,000 contractor roles to help save £1.6bn

BP is to cut thousands of jobs from its global workforce, amounting to 5% of its staff, in an effort to save billions in costs to appease its worried shareholders.

The oil company reportedly told staff on Tuesday that it would cut 4,700 jobs and scrap another 3,000 contractor positions, after its chief executive promised to reduce the company’s costs by at least $2bn (£1.6bn) by the end of 2026.

Murray Auchincloss has come under pressure from shareholders to improve BP’s returns amid growing dissatisfaction over the strategy set by his predecessor, Bernard Looney, before he was ousted from the top job for failing to disclose personal relationships with colleagues.

In an internal memo to staff, first reported by Reuters, Auchincloss said he understood and recognised the “uncertainty this brings for everyone whose job may be at risk” and also “the effect it can have on colleagues and teams”.

He said: “We began a multiyear programme to simplify and focus BP last year – strengthening our competitiveness and building in resilience as we lower our costs, drive performance improvement and play to our distinctive capabilities.

“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.”

BP employs 87,800 people worldwide. In the UK, its head office is in London, with other offices in the south-east of England and in Aberdeen.

Auchincloss, who was previously BP’s finance chief, was expected to use an investor event in New York early next month to reassure shareholders of the company’s strategy after a string of disappointing financial results and a sluggish share performance.

However, earlier this week the company postponed the event to 26 February and changed the location from New York to London so that Auchincloss can recuperate from a “planned medical procedure”. He is expected to be back in the office by February, BP said.

At the same time, BP revealed a worrying trading update for the final quarter of last year before its full-year results next month. The update warned that oil production for the last quarter would be lower than in the previous quarter, while the profit margins from its refining business would be “weaker” and its oil trading performance would be “weak”.

BP has fallen out of favour with investors since Looney set out a plan to slash its oil and gas production in favour of spending billions on green energy projects. Under Auchincloss, the company has begun to dilute its climate pledges, but investors remain concerned over the returns BP can expect from its big-ticket green projects, including multibillion-pound plans to develop offshore windfarms off the UK coast.

BP’s shares have fallen by about 7% in the past year, while its rivals Shell, Chevron and ExxonMobil – which are pursuing higher oil and gas production – have seen their market values climb by 8% or more.

The company was worth about £110bn before Looney was named as the next chief executive in late 2019, and now has a market capitalisation of less than £68bn.