THE grim outlook for the North Sea oil industry was further underlined as BP said it was freezing base pay across the group this year.

 

It is the latest in a series of steps by oil majors to cut costs in response to sinking oil prices.

Details come in a leaked internal memo to staff as BP seeks to rein in costs in response to a 60 percent fall in oil prices over the last six months.

The company "needs to take a number of measures in response to the harsh trading environment," said chief executive Bob Dudley in the memo. "One of the measures we are taking is a general freeze to base pay for 2015, with only a few exceptions for specific circumstances around the world."

The revelation came as Labour leader Jim Murphy took his shadow cabinet to the oil city of Aberdeen.

BP, which employs more than 80,000 people around the world, is the first global oil company to announce a pay freeze for staff.

Producers have been forced to review spending on new projects, reduce staff and cut costs as oil slumped to under $50 a barrel.

Last week BP said that it was cutting 300 staff from its 3,500-strong workforce in the North Sea in response to the tougher operating environment caused by lower oil prices.

A BP spokesman would not comment directly on the internal message but confirmed the step, saying: "We have told staff across BP that we intend to freeze base pay worldwide for 2015.

"Together with our work to simplify and increase efficiency across BP, we see this as a prudent measure in response to the current challenging market environment in which BP is operating."

Mr Dudley has previously said he expects the price of oil to remain low for the next three years and send petrol prices in the UK below £1 per litre.

But he added that another corollary will likely be further job losses and falling investment in the North Sea oil industry, with Scotland likely to come under "some stress".

BP has two large projects in the North Sea which have had £8billion investment over 10 years.

In December, BP said that it was looking at making savings from restructuring of around $1bn over the next five quarters but the recent fall in oil prices has brought added focus to that drive.

North Sea company Talisman Sinopec last week announced as many as 300 of its 3000 workers could lose their jobs, and rates for contractors would also be cut.

Managing director Paul Warwick blamed current oil prices for the need to restructure. Those affected will mainly be onshore staff.

And Wood Group PSN has said 30 full-time jobs could go at its Aberdeen offices, while Shell, Chevron and ConocoPhillips have also announced job cuts.