BP to axe 5,000 jobs worldwide

Oil major BP is set to axe 5,000 of its 97,000 employees worldwide under cost-cutting plans announced today in the wake of a profits fall.

Confirmation of the plans came as the world’s third-largest oil company saw profits tumble by more than a fifth to $17.29bn (€11.8bn) last year as problems with its US refineries continued to dog the business.

It left chief executive Tony Hayward determined to “close the performance gap” with its rivals after a difficult year for the company.

The company’s long-serving head Lord Browne resigned last May after he lied to a court in a bid to block stories about his private life, while BP also faced criticism over the March 2005 explosion at its Texas City refinery, where 15 workers died.

But Mr Hayward said today that he was confident of cutting corporate overheads by up to 20%, potentially saving up to $1.5bn (€1.02bn) a year.

The latest cuts – expected to cost BP $1.35bn (€920m) in restructuring charges – come after BP took 9,500 people off the payroll by selling its US retail business to franchisees late last year.

Mr Hayward looked to reassure investors that the firm was over the worst of its recent woes with a 25% hike in BP’s quarterly dividend and an “increasingly robust” view of the group’s prospects.

BP has struggled with production problems at its US refineries as well as lower margins due to soaring oil prices, which sent its refining and marketing operation to a fourth-quarter loss of $1.34bn (€910m).

Mr Hayward said the performance of refining and marketing was “very poor - despite the fact that we have a strong set of assets”.

“The principal reason is poor reliability in some of our US refineries, which is compounded by the complexity and overhead structure of the business segment,” he added.