Emerging scenarios from dwindling oil price
Falling oil prices have triggered a wave of cutbacks and scenarios in the industry. International Energy Agency again cut its prediction of global oil demand growth, saying demand will grow by only 900,000 barrels per day next year, 230,000 barrels per day fewer than its previous projection. OPEC also cut its global demand for crude in 2015.
KPMG analyst still bullish
The downturn in crude oil prices in recent months will not last forever, and what the market is experiencing now is not the old boom and bust period, said Regina Mayor, KPMG’s advisor for the consulting practice.
“I’m still incredibly bullish on the industry, and I do think it’s far more stable and resilient than it was in decades past. That’s not to say that it won’t experience a contraction or two, but it’s not the boom and bust cycle we’ve seen.”
Although there is no crystal ball to tell the industry where crude oil prices are going, prices will probably not drop too much lower, and could possibly begin gaining altitude in the not-too-distant future, Mayor said.
Jobs already giving way
Dutch oilfield services firm SBM Offshore and BP have announced job cuts and management restructuring in response to the dwindling crude oil price.
SBM Offshore announced that it will cut 1,200 positions out of the 10,500 people it employs worldwide by the end of 2015 as it seeks to reduce costs in a tough market environment. SBM said it would cut 600 contractor staff and a similar number of permanent employees in order to optimize its cost base. The cuts will vary by country, depending on local legal requirements, it added.
BP also confirmed that it would be cutting management positions after reports that it planned to cut hundreds of jobs and would freeze projects amid a plummeting oil price. The company – which employs nearly 84,000 people around the world – is likely to see back office jobs go across its global organization. In the UK, middle-management jobs in London, Sunbury-upon-Thames and Aberdeen are likely to be at risk as the company reshapes its corporate structure.
Houston-based oil services company Halliburton said it is cutting 1,000 jobs outside North America.
Oil giants cutting costs
Oil giants are already cutting costs. ConocoPhillips announced its capital expenditures plan for 2015, and the company expects to spend 20 percent less next year than this year. ConocoPhillips said that 2015 CAPEX would total $13.5 billion, down 20 percent from 2014.
“The reduction in capital relative to 2014 primarily reflects lower spending on major projects, several of which are nearing completion, as well as the deferral of spending on North American unconventional plays,” the company said in a statement.
Oil rigs in operation dropping
The number of oil rigs in operation is falling. According to latest weekly rig count from Baker Hughes, the number of oil rigs in use in the US fell by 27, to 1,893 from 1,920 – the biggest single weekly drop in rig count in two years.
Rig counts often take three to six months to respond to swings in the oil price market