200,000 Oil Jobs Go As Low Oil Prices Choke Industry

Lisa Smith, BA (Hons), CeFA
By

At least 200,000 oil and gas contractors have lost their jobs as employers race to cut costs to protect their businesses from the dip in oil prices.

While companies and business analysts concentrate their efforts on how this is affecting the share prices and balance sheets of oil companies, little thought is given to how this cull affects contractors and their finances.

Tens of thousands of oil and gas workers are expats based in countries with a low cost of living, such as Thailand and The Philippines.

But living in a country with a low cost of living may make savings go further, in the long term contractors need to consider their financial futures.

Protecting retirement cash

The odds are oil prices may not recover to anywhere near the $100 a barrel price until at least 2030, according to some OPEC producers.

The doubt is will employers have the cash to fund these schemes and what will happen to the cash contractors have invested for their retirement in the long term.

The thought going through many of their minds must be how to protect their retirement cash.

After all, many of those losing their jobs now will be approaching retirement in 2030 and as oil companies mothball rigs and push new projects on to the back burner, many contractors may never see jobs in their industry recover to the levels of 2014.

Moving to a low-cost economy is a short term measure that allows contractors to take stock and plan for the future.

Long-term retirement solutions

A long term solution is taking personal control of pension cash.

How to do this depends on tax residence.

  • For British oil and gas workers, moving out of a company scheme into a self-invested pension plan (SiPP) is one option.
  • For expats with a UK pension in companies like Shell, a Qualifying Recognised Overseas Pension Scheme (QROPS) may provide the answer. A QROPS has a lot of similarities with a UK SiPP but offers wider tax and investment opportunities.

Whatever the future of the oil and gas industry, the fact is the job shake out will allow companies to look at operating efficiency – and that means recruitment, salaries and working practises will come under close scrutiny.

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