BP PROFITS have nosedived by 66% the oil giant revealed yesterday as it published its first quarter profit.
BP warned it faces an ‘exceptional level of uncertainty’ after a sharp reduction in demand during the corona crisis as many factories remain shut.
It has sent prices to 20-year lows, with US oil turning negative briefly for the first time ever last week.
BP said that underlying replacement cost profit, its definition of net income, was $800m (£645m) in the first three months of 2020 – down from $2.4bn a year earlier.
However, it said it would keep paying shareholders a dividend.
Bernard Looney, BP’s CEO, said in a statement: ‘Our industry has been hit by supply and demand shocks on a scale never seen before.’
Yesterday morning saw extreme price swings as oil prices continued to tank, falling for a second consecutive session on fears that global storage for oil is running out.
The price of West Texas Intermediate fell to a low of $10.07 a barrel while oil prices plummeted 30% after United States Oil Fund, one of the largest oil ETFs, announced it would sell all futures contracts for delivery in June over a four day period.
Meanwhile, as many as 30,000 jobs hang in the balance in the UK’s oil and gas industry as a result of the coronavirus pandemic and ultra low oil prices. The results of a survey put out by Oil and Gas UK (OGUK) published yesterday show that many firms are struggling to survive.
It has called for the transition to net-zero greenhouse gas emissions to be at the heart of its recovery plan.
At its peak, a barrel of Brent Crude oil sold for about $120 – but in recent weeks, that has fallen as low as $16 with no real sign of it recovering.
The industry fears the problems will last much longer than the Covid-19 pandemic, and that has meant many workers are being laid off rather than furloughed.
The predicted job losses represent about one in five of the 151,000 people employed directly or indirectly by the sector.
Some job losses have already been announced with ‘many more’ expected to be confirmed in the coming months.
OGUK chief executive Deirdre Michie said: ‘With historic low oil and gas prices coming so soon after one of the most severe downturns our sector has experienced, these findings confirm an especially bleak outlook for the UK’s oil and industry.’
The OCG report ‘A crisis behind a crisis’ sets out the concerns of the trade unions in respect of the immediate impact on oil and gas activities and points to the effect this will have on government objectives for the wider energy strategy and the economy.
The RMT union said: ‘The trade unions are clear; the actions of the industry right now risk the government energy objectives and will severely damage the UK economy and that cannot be allowed to happen. We are calling for an immediate intervention to halt the “carnage” which is occurring in terms of jobs and to ensure a just transition to a carbon neutral state can be achieved.’
- The Trades Union Congress (TUC) confirmed yesterday that Tory ministers have held a series of high-level meetings with the trade unions and ‘business leaders’.
The TUC told News Line: ‘At a time of national crisis the TUC is meeting with employers and the government to help protect workers’ jobs.’
Trade unions and bosses have been drafted in to seven sector-by-sector meetings chaired by the Tory business secretary Alok Sharma in recent days.
The meetings were called after fears that workers will be reluctant to return to work during the coronavirus epidemic, and the trade union leaders were invited because the government is fearful that workers will not follow its line to start working again. The support of the unions is required to end the lockdown.