China’s biggest oil companies say they’ll cut costs, but not employees.
As the collapse in crude prices curbs profits and prompts a wave of layoffs in the energy industry from Schlumberger Ltd. to Royal Dutch Shell Plc, Chinese state energy giants say their employees are safe.
The oil and gas industry has cut more than 176,000 jobs globally this year and more reductions are likely, according to Swift Worldwide Resources. While eschewing those layoffs may avoid a repeat of protests early last decade when China Petroleum & Chemical Corp. and PetroChina Co. fired tens of thousands of workers, it’s going to make further cost savings a challenge, said Gordon Kwan, a Hong Kong-based analyst at Nomura Holdings Inc, Bloomberg reported.
Beijing-based PetroChina will cut capital expenditure by 9% to $41.6 billion in 2015, the third consecutive year of reductions. Sinopec, as China Petroleum is known, plans to reduce capital spending by12% to $21 billion, while Cnooc Ltd. will lower the expenditure by as much as 35% to 70 billion to $12.5 billion. The three employ more than 900,000 people, according to data compiled by Bloomberg.
China’s oil majors are primed to join the latest round of global energy deals triggered by the collapse in energy prices. PetroChina Co., the nation’s biggest explorer and producer, said this week it is eyeing targets and in discussions about assets swaps in North America. Its rival, China Petroleum & Chemical Corp., Asia’s largest refiner, signaled it is looking at overseas acquisitions.
The country’s so-called Big Three oil and gas companies, which also includes China National Offshore Oil Corp., spent nearly $119 billion from 2009 through 2013, accounting for 13% of global transactions in the industry, data compiled by Bloomberg show.
