Subsea 7 will cut 1200 staff from its workforce, and five vessels from its active fleet by early 2017 amid the ongoing downturn in the oil and gas industry.
Subsea 7 said that the job and vessel cuts together with other cost savings initiatives started at the beginning of the year, should save US$350 million annually, but will see a one of cost of less than $100 million.
The firm hasn't said where geographically or from which division the job cuts will go, however, UK news organization the BBC said up to 430 would be in the UK.
Subsea 7 described the moves as a reorganization which will create new reporting segments: SURF and conventional, i-Tech Services, and corporate, which will include renewables and heavy lift. These replace the existing Southern Hemisphere and Global Projects and Northern Hemisphere and Life of Field business units.
"In view of continued difficult business and economic conditions in the oil and gas market, a second phase of global resizing and cost reduction measures will begin in 2016," the firm said.
"The Group plans to resize its global workforce to approximately 8000 by early 2017, down from the current level of 9200."
The firm is expected to cut some 430 UK jobs, with most of them in Aberdeen, according to news outlet Bloomberg.
Consultation with employees and employee representatives will take place on a local basis and consultation processes have begun in Norway and the UK.
Under the new organizational structure John Evans, CEO, and Øyvind Mikaelsen, appointed executive vice president – commercial, will report to CEO Jean Cahuzac/ Steve Wisely will be appointed senior vice president i-Tech Services, reporting to John Evans.
Cahuzac said: “Our new organizational structure reflects our focus on commercial and long-term strategic priorities as we adapt to the present low levels of activity and drive more efficient ways of working with our clients. The reduction in the size of our workforce is a necessary step to maintain our competitiveness and protect our core offering through the oil price cycle.
“We remain confident in the long-term future for deepwater oil and gas production. We are committed to retaining our core capabilities and developing our leading market position through a strategy focused on differentiation delivered by our people, assets and technology.”
"While hugely disappointing and devastating for those affected, these redundancies don't come as a surprise," Neil Gordon, Subsea UK told Bloomberg. "Our recent survey revealed that most subsea companies have seen a fall in revenues as a result of project delays or cancellations. There is no doubt there will be further job losses in subsea this year as the impact trickles down the supply chain."
In July 2015, Subsea 7 announced its plans to save $550 million by cutting 2500 jobs, and 12 vessels from its fleet, which were announced a couple of months earlier in May. The company had struggled then after Q2 2015 revenues dropped $1.3 billion, down $553 million when compared to Q2 2014, which the company said reflected the difficult industry conditions and declining workload.
Image: Subsea 7's Seven Borealis.
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