OFFSHORE oil and gas service firm Subsea 7 has announced it is to cut up to 430 UK jobs, most of them in Scotland.
In the latest blow to Scotland's oil and gas sector, global subsea engineering company told staff in Aberdeen, Glasgow and London it will be entering a formal consultation over redundancies.
The seabed-to-surface engineering, construction and services contractor plans to axe 1,200 roles worldwide, out of a total workforce of 9,200 in a move said to be in response to "continued difficult business and economic conditions" in the oil and gas market.
It is understood most of the UK jobs will go at Aberdeen which is its “subsea hub” and employs around 1800 people.
A year ago, the company shed up to 410 UK jobs by the end of 2015 as part of a cost reduction programme. Subsea 7 said “continued difficult business and economic conditions in the oil and gas market” had caused it to undertake a second phase of global resizing and cost reduction measures, beginning this year.
The development comes as the UK government is understood to be preparing contingency plans to support the troubled North Sea explorer EnQuest amid the threat of a low oil price-induced meltdown in the region.
The Oil and Gas Authority (OGA) was understood to be considering tackling the risk of insolvencies among struggling players such as Enquest and Premier Oil.
The OGA was formed to safeguard a long-term future for the North Sea but it is understood it has since had to form a ‘low oil price contingency team’ to understand the pressing issues facing companies and what can be done to avert a raft of insolvencies which would prove calamitous for the industry and taxpayers.
The Subsea 7 move is expected to save the firm nearly £250 million a year but said it remained "fully committed to preserving the critical skills, expertise and assets it requires to realise greater project value for its North Sea clients".
Phil Simons, vice president for UK and Canada, said: "Today's difficult decision is a regrettable consequence of the prolonged and challenging environment the oil and gas supply chain is now experiencing, particularly in the north-east of Scotland.
"Unfortunately, the rapid decline in project awards, increased cost pressures and market unpredictability, necessitates further streamlining of our structure and processes to protect our business and the skilled services we provide.
"I understand the dramatic impact these changes will have on our workforce and their families.
"I wish to reassure them that we will do all we can to support them through this process, to ensure they are treated with respect, compassion and sensitivity during this difficult time.
"Every effort will be made to limit the number of compulsory redundancies."
Consultation with employees and employee representatives will take place on a local basis and consultation processes have begun in Norway and the UK, the company said.
“Subsea 7 remains fully committed to preserving the critical skills, expertise and assets it requires to realise greater project value for its North Sea clients, without compromising on quality and safety,” the company said in a statement.
Subsea 7 chief executive Jean Cahuzac, said: “The reduction in the size of our workforce is a necessary step to maintain our competitiveness and protect our core offering through the oil price cycle.
“We remain confident in the long-term future for deepwater oil and gas production. We are committed to retaining our core capabilities and developing our leading market position through a strategy focused on differentiation delivered by our people, assets and technology."
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