The French oil group Total has unveiled plans to cut 180 jobs in the UK, reduce refinery capacity and slow spending on North Sea fields after it crashed to a $5.7bn final-quarter loss.
The company, which has just come under new leadership, said it would also sell off $5bn worth of assets worldwide and cut exploration costs by 30%. It has taken huge financial writedowns.
The jobs are to be axed and the capacity reduced by half at the Lindsey refinery in Linconshire, once the centre of a huge labour dispute over the use of foreign workers. Total, which once tried to sell off the facility, said the staff working at the elderly plant would fall from 580 to 400 by the end of next year but that almost £200m could be spent by 2020 improving the refinery’s efficiency.
Cutbacks in Total’s French refineries are expected to be announced in the next few months, while 15% of the staff at its Paris headquarters are already set to go.
Patrick Pouyanne, the chief executive who took over after the death in an air crash last autumn of Christophe Margerie, said he wanted to demonstrate a “strong and immediate response” to the changed oil price environment. “With every challenge is an opportunity … the time is right for us to do more with less,” he told a meeting of investors, while insisting that the company was still in good shape.
“With its high-quality teams, financial strength and ability to adapt, the Group is focused for the short term on generating cashflow and reducing its breakeven point, and for the medium term confirms its growth strategy,” he added.
The big hit to Total’s accounts came from a $6.5bn impairment charge on its Canadian tar sands operations, its US shale business and European refineries. This drove the quarterly loss to $5.7bn compared with a profit of $2.2bn for the same period of 2013. Excluding the writedowns and adjusting for changes in inventories, Total unveiled a net profit of $2.8bn in the last quarter, down from $3.84bn in the same period a year ago.
Britain’s ageing refineries have been gradually closing as they struggle to compete with lower-cost foreign rivals and a change in fuel use from petrol to diesel. There have been fears among motoring organisations that lower domestic refining capacity could push up prices.
This article was written by Terry Macalister, for theguardian.com on Thursday 12th February 2015 18.20 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010