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BP Announces Plan To Cut Staff Across All Sectors

BP (NYSE:BP) has announced that the company will be trimming its employment rolls worldwide in a massive restructuring of the company tied to the decline in the price of oil that has affected the entire world. The job cuts are slated to be complete by the end of 2015. The exact number of jobs that will be eliminated has not been disclosed by the company. BP currently has about 84,000 employees on its payroll.

Staff members in all sectors of the company will be affected by the cuts, including those at BP’s main centers in Britain and the United States. The divisions expected to be hardest hit by the staff reductions include oil exploration and production, refining and trading, and administration.

The goal of the restructuring plan is to reduce costs and increase efficiency across the entire company. The British oil giant has estimated that the cost of the restructuring will be about $1 billion. That cost will be spread out over the next five quarters. BP will take the initial charge for its restructuring plan in the fourth quarter of 2014.

The cost of a barrel of oil has fallen more than 40 percent since the beginning of summer. On Wednesday, the price of Brent crude hit a five-year low, dropping below $66 a barrel. The company currently approves projects based on the assumption of an average price of $80 a barrel.

The precipitous drop in oil prices has been tied to oversupply and weakened demand due to a weakened global economy. North America has been pumping volumes of its own high quality crude and OPEC has resisted cutting its current supply. This has led to a massive supply of fuel being made available to countries around the world.

BP’s global oil and gas business has suffered tremendously from the drop in the price of oil that has occurred this year. BP has sold nearly $43 billion worth of assets in its efforts to cover rising business costs as well as covering damages from the company’s 2010 Gulf of Mexico oil spill. Earlier this year, the company announced that it would be reducing investment in 2015 by up to $2 billion.

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