Norwegian oil services firm Aker Solutions plans to cut its domestic workforce in response to lower demand after crude prices tumbled, the company said on Wednesday. Around 300 employees within the maintenance, modifications and operations (MMO) division could be affected out of the unit’s total staff of 4,300. As previously announced an additional 70 MMO employees may be temporarily laid off.
“Activity in the MMO market in Norway has dropped considerably since last summer, causing overcapacity,” Per Harald Kongelf, head of Aker Solutions in Norway, said in a statement. “As we see it today, these challenges will continue through 2015 and possibly also into 2016,” he added. Oil prices have dropped by almost half to around $60 a barrel since last June on a global glut of oil, forcing energy companies to reduce spending by delaying and cancelling projects.
Aker Solutions has 8,300 employees in Norway. Revenues in the MMO business accounted for around a quarter of the firm’s total sales in the fourth quarter. Activity in the North Sea, Aker Solutions’ largest regional market, is expected to be lower over the next 1-2 years even though the firm has been chosen for a key engineering contract for the $29 billion Johan Sverdrup field development.
By 1232 GMT, the company’s shares traded 3 percent higher for the day, outperforming a 1.3 percent rise in the European oil and gas index.