Recession: Oil Workers Go Spiritual As Massive Sack Hits 350000
Workers in Nigeria’s multi-billion
dollars oil and gas industry have resorted to spiritual help, as job
cuts by international oil companies (IOCs) and their local counterparts
in their global services, including hit an all-time of high of 350,000.
The gale of sack commenced in 2014 till when crude prices started to
fall till date.
The situation, a source in one of the major oil
companies told New Telegraph, is so scary that some workers that are yet
to be affected in Nigeria have resorted to engaging in spiritual
exploits to evade the sack, especially in this recession.
“While
parents of some workers are in their homestead consulting herbalists,
pastors and Islamic clerics for spiritual help,some workers are
organising prayer sessions and fellowship somewhere in Port Harcourt and
the Ikeja area of Lagos to avert the gale of sack sweeping across
various sections of the industry,” he said.
Inventory from 12
major oil producers and traders at the weekend, which revealed that
350,000 workers had lost their jobs, showed that the gloomy situation
will persist, as “market will stay in the corridor of $40 to $50, max
$55 per barrel price.”
Oil companies, especially explorers,
slashed hundreds of billions of dollars in investment to weather the
rout, but the majority of oil traders reported the mass job loss using
the inventory, according to Bloomberg. It said that market re-balancing
has been pushed back by at least six months from their projections in
early 2016 because of higher-than-expected production from Iran and
Saudi Arabia, coupled with the resilience of U.S. shale output.
“The
oil market is not yet balanced,” Saad Rahim, chief economist at oil
trading house, Trafigura Group Pte, said, adding that the “market has
yet to start working through millions of barrels of inventories
accumulated during the downturn.”
Checks by New Telegraph showed
that over 4,000 skilled and 6,000 unskilled workers were affected in
Nigeria. Local oil firms in production and servicing strata of the
industry have retrenched employees albeit on a smaller scale.
Further
checks show that more workers are likely to be sacked in the coming
days, as the harsh conditions in the country show no signs of abating.
Mobil Producing Nigeria (MPN) Unlimited, operator of the Nigerian
National Petroleum Corporation MPN/NNPC Joint Venture in Akwa Ibom laid
off about 150 contract staff and 40 drivers from its employ, while Total
fired 100 in its Nigerian operations.
Over 4,000 Nigerians in
the oil and gas industry lost their jobs in the last 18 months. A survey
by this newspaper showed that while about 75 per cent of these oil
workers were former staff in the operations of the IOCs, the indigenous
firms sacked about 1,000 staff, which is the remaining 25 per cent.
In
total, this number of sacked workers is 16.4 per cent of the total
number of staff on sack list by just two oil giants, Shell and Chevron,
in their global operations. Oil giant, Shell, had on May 23, declared
plans to sack additional 5,000 staff, raising the number of staff to be
laid off in Nigeria and other countries of operations by the company and
another oil major, Chevron, to 23, 500. These have heightened panic and
generated confusion among some staff of the companies who are now
considering industrial action.
Shell’s vice president for the
United Kingdom (UK) and Ireland, Paul Goodfellow, who announced the plan
to lay off 5,000 more staff before the end of 2016, said that 2,200
more jobs would be cut in the first phase of the new disengagement, as
the world’s second biggest oil companies continue to adjust to the slump
in oil prices.
This takes the tally of sacking by Shell to
15,000 between 2015 and 2016, as the oil firm continues to adjust to the
slump in prices. Chevron, on its own, will round up the number of
sacked workers to 8,500 before December while other companies such as
ExxonMobil, Total have also sacked about 4,000 workers secretly in their
global operations.
“These are tough times for our industry,”
Goodfellow said in a statement. “We have to take further difficult
decisions to ensure Shell remains competitive through the current,
prolonged downturn.” At least 5,000 jobs will be cut this year, Shell
said in an emailed statement.
These reductions are in response to
oil prices staying “lower for longer,” and as a result of the
acquisition of BG Group Plc. earlier this year, said Goodfellow. Shell
and BG employed about 94,600 people at the end of 2015.
The
industry is cutting deeper despite oil’s 80 per cent recovery since last
January. Prices remain about half the level of two years ago and
companies’ earnings have been pummelled, debt has increased and credit
ratings have been cut. To help protect their balance sheets, companies
have deferred or cancelled billions of dollars of projects, renegotiated
contracts with suppliers and eliminated thousands of jobs. Shell had,
before Goodfellow’s announcement, revealed its plans to sack 10,000
staff and slash direct contractor positions in the company’s unedited
full year 2015 results.
While crude has, according to Bloomberg,
climbed from the 12-year lows reached at the start of 2016, a supply
glut caused by the U.S. shale boom is pinning prices at half the levels
of two years ago. “The issue is that once prices go up too fast,
American drillers start to produce more,” Arzu Azimov, head of Socar
Trading SA, said. “The market will stay in the corridor of $40 to $50,
max $55.”
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