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.”