London, UK | – British multinational energy giant BP is freezing base pay across the group this year, the latest in a series of steps by oil majors to cut costs in response to sinking oil prices.
Over the past year, oil majors have been selling assets to protect cash flows and shareholder dividends. Many have accelerated cuts in capital and operating expenditures, including freezing some projects, as crude prices more than halved since June to below $50 per barrel.
Salaries in the oil sector are a major part of operating expenses. BP employed 83,900 employees in 2013 and paid them around $13.6 billion in benefits, including wages and pensions, according to the company’s website. “The tougher external environment in 2015 means that our businesses and functions need to work… to take a number of measures in response to the harsh trading environment,” Chief Executive Bob Dudley said in a message to staff on Monday.
“One of the measures we are taking across the group is a general freeze to base pay for 2015, with only a few exceptions for specific circumstances around the world,” Dudley added. A BP spokesman would not comment directly on the internal message but confirmed the step, saying: “We have told staff across BP that we intend to freeze base pay worldwide for 2015. “Together with our work to simplify and increase efficiency across BP, we see this as a prudent measure in response to the current challenging market environment in which BP is operating.”
In December, BP announced a $1 billion programme to cut thousands of jobs globally, including its UK North Sea operations.