BP set to cut hundreds of UK and US jobs as spill costs and oil price plunge hurt profitability

Oil major BP is set to cut hundreds of back-office jobs in the US and the UK in line with the recent slump in oil prices and rising costs related to the Gulf of Mexico oil spill, as the company looks to remain cost-effective and profitable.

The Sunday Times reported that the 35% decline in oil prices since the summer has given fresh impetus to BP's restructuring programme that started two years ago in connection with the Gulf of Mexico oil spill.

"What you'll see with this simplification plan is that headcounts are starting to come down across all of our activities in upstream, downstream and in the corporate centres — essentially the layers above operations," the newspaper quoted BP finance director Brian Gilvary as saying.

"The fall in oil prices has added to the importance of making the organisation more efficient," a BP spokesman told the BBC. "The right size for the smaller portfolio we now have".

Analysts expect cuts in exploration spending and possible project deferrals, the Financial Times added.

"Oil is concentrating minds on making the organisation more efficient and the right size for the smaller portfolio we have now," the newspaper quoted a statement from the oil giant.

Among BP's 84,000 employees worldwide, about 15,000 are based in the UK and 20,000 in the US. The company's UK offices are in London, Milton Keynes, Sunbury on Thames and Aberdeen, among other places.

In addition to the gigantic litigation costs related to the Gulf of Mexico spill, falling oil prices have significantly impacted the company's results.

For the third quarter, BP reported replacement costs profits of $2.4bn (£1.5bn, €2bn), down from $3.2bn in the same period last year.

As of September, costs related to the Deepwater Horizon oil spill had reached $20bn.

The company is expected to outline details of the planned job cuts on 10 December.