Subsea 7 cited the continued difficult business and economic conditions in the oil and gas market as the reason for the latest round of global resizing and cost reduction measures, which will begin 2016.
Under the program, Subsea 7 says it will take measures to reduce its global workforce to 8,000 by early 2017, down from 9,200 currently. In addition, up to five vessels are scheduled to leave the current active fleet by way of stacking owned vessels and returning chartered vessels as contracts expire.
The majority of the layoffs will be in the UK and Norway.
The company will also be restructuring its organization to include just SURF and Conventional, i-Tech Services, and Corporate (Renewables and Heavy-lift) business units.
“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,” commented Jean Cahuzac, Chief Executive Officer. “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.”
The latest cuts follow an initial round of cost reduction measures initiated in May 2015. During that first phase, Subsea 7 sought to rescue its workforce by approximately 2,500 by early 2016, down from the 13,000 reported at the end of 2014.
Subsea 7 estimates that the combined measures from the two phases will lead to approximately $350 million in annual savings, less than $100 million of which will be recognized in 2016.
“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,” added Cahuzac.