Oil Price Slump Leads To More Job Losses

The toll of oil, gas and mining industry job losses is continuing as thousands more posts are axed worldwide.

As the price for a barrel of crude sinks to $23, the costs of running an oil business are starting to bite.

Global giant BP has slashed 4,000 jobs worldwide – including 20% of North Sea contractors.

Although the price has recovered to $30, that’s still way below the $120 a barrel oil was fetching only a year ago.

Putting the price in perspective, oil has reached a 12-year low and lost 70% of value in 18 months.

Empty tankers needed to store oil

The slide has prompted oil companies to put up the shutters, mothballing exploration projects and looking for ways to save money on day-to-day running costs.

And the forecast is for worse to come as sanctions against Iran are lifted. The government in Teheran has plans to bring another 3.5 million barrels a day online to add to the glut.

OPEC, the organisation representing oil producing nations such as Saudi Arabia, Qatar, the United Arab Emirates is desperately pumping out oil at a loss in a bid to drive high cost producers out of business.

The main targets are US and Canadian shale oil, which are expensive to produce, but other collateral damage is hitting the North Sea and Azerbaijan.

The International Energy Agency is warning the world is running out of storage capacity for unsold oil and that empty oil tankers could be called in to service to help with the overflow.

Safeguarding pensions

For contractors, safeguarding company pensions seems a good idea.

Companies will go bust or merge in the crisis.

For British contractors or foreign oil contractors with UK pension rights, investigating a switch to a Qualifying Recognised Overseas Pension Scheme (QROPS) may prove prudent.

The pensions are designed for expats and are managed much like an onshore SIPP, but with a much wider range of flexible investment opportunities.

The fear is the oil industry will hit a slump last seen 12 years ago and that thousands more jobs are at risk.

Contractors sitting out the slump in low cost countries, like The Philippines and Thailand may find their savings may have to last longer than they suspected and protecting their retirement cash in a QROPS allows them financial freedom.

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