Oil Downturn Has Cost U.K. 120,000 Jobs

Oil and gas industry in the UK would have lost a total of 120,000 jobs by the end of the year following the slump in oil prices, according to the industry body.

A total of 330,400 jobs will be supported by the oil and gas production this year, down from 453,800 in 2014, the Oil & Gas U.K. report showed. The organization said it expects the number of supported jobs to fall a further 40,000 by the end of the year, this includes non-oil producing jobs in the wider economy, hotel staff and taxi drivers.

The figures show how much oil companies have shrank in order to weather the collapse in crude oil prices and the impact of the downturn on the whole economy.

“The industry has been spending more than it is earning since the oil-price slump towards the end of 2014,” Deirdre Michie, chief executive officer of Oil & Gas U.K., said in a statement. “To survive, the industry has had no choice but to improve its performance.”

Royal Dutch Shell Plc said in May it was planning to cut 475 jobs in its UK and Ireland exploration and production business, while BP Plc said  it would cut North Sea jobs by 600 over the next 24 months.

The job losses have come as the sector has been forced to reduce its capital expenditure, downsize, cancel or postpone costly projects and even sometimes cut dividends to boost operating capital. Just this week, Shell announced it was cutting its spending further from the previous forecast of $30 billion to $29 billion.

The total employment the oil and gas industry can sustainably provide “depends on the level of investment attracted to the basin,” Michie warned. “If investment falls, then so will jobs.”