London, UK | – British multinational oil super major BP plc said on Wednesday it would spend $1billion on group-wide restructuring in the coming year as it laid out its long-term plans for its upstream oil and gas business.
BP, Europe’s third biggest company by market value joins larger rivals Royal Dutch Shell and Total SA in restricting budgets and offloading operations as margins are squeezed by the 40% drop in oil since June. The British company said as part of its programme to simplify across its upstream and downstream activities and corporate functions, it expected to incur the charges over the next five quarters, including the current quarter.
The changes are part of the company’s move to downsize and simplify its operations following $43 billion worth of divestments since the 2010 Gulf of Mexico oil spill.
Chief Executive Bob Dudley said Wednesday the company continues to find ways to “eliminate duplication and stop unnecessary activity that is not fully aligned with the group’s strategy.”
BP said it is investing in gas projects, typically less exposed to oil prices, which have slumped in the past few months.
In light of the current outlook for oil prices, BP said it would also review its capital expenditure plans for 2015.
The group said in a statement it had a strong balance sheet, with historically low gearing of 15% at the end of the third quarter of 2014, which provided time and flexibility to adjust to changes in the environment, including the oil price.
The company has warned that it will cut more jobs in the head and back offices. BP employs some 84,000 people worldwide, including 15,000 in Britain.