Nexen Energy, a wholly owned subsidiary of China’s CNOOC Ltd, said on Tuesday it will cut about 400 jobs in North America and the United Kingdom in response to plunging global oil prices. The Calgary-based company is also slowing work on the next phase of its Kinosis oil sands project in northern Alberta, which has regulatory approval to produce 70,000 barrels per day.
Kinosis 1B is in its early stages and a Nexen spokeswoman said the company has no estimates on when oil will be produced from that phase of the project. Nexen, which was bought by state-controlled CNOOC in 2013 for $15.1 billion, has begun to cut some 340 employees in North America, and started consultations to lay off around 60 workers at its UK operations. The layoffs amount to about 12.5 percent of Nexen’s global workforce of around 3,200.
“In response to the recent industry downturn that has affected all companies in the energy sector, a decision was made to conduct a thorough review of our organization to ensure our long-term viability and sustainability,” said Fang Zhi, Chief Executive Officer of Nexen.
“While regrettable, these organizational changes are necessary to align the company with our reduced capital spending program.” To win approval for Nexen acquisition, CNOOC promised the Canadian government that it would try to retain the company’s management and employees, as well as invest “significant capital” in Canadian oil and gas resources. Quinn Wilson, vice president of human resources and corporate administration, said the layoffs would not affect oil sands production, but 10 positions would go at Nexen’s Long Lake project. Canada’s Industry Ministry is conducting a review.
“Industry Canada is reviewing the announcement and will ensure compliance with the Investment Canada Act,” Jake Enwright, press secretary for Minister of Industry James Moore said. As well as the Long Lake project in Canada’s oil sands, Nexen is a leaseholder in the deepwater Gulf of Mexico, and one of the largest players in the North Sea where it produced first oil from the Golden Eagle project in 2014.
Last month, CNOOC slashed 2015 capital spending by 26 percent to 35 percent to between 70 billion and 80 billion yuan ($11.19 billion-$12.79 billion), but still plans to increase production by up to 15 percent. Benchmark global oil prices have plunged more than 50 percent since June, with international Brent last trading around $53 a barrel. –