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Oil Price Fall Has Negative Impact on jobs


Oil Price Fall Has Negative Impact on jobs
Some servicing companies are slashing workers’ salaries which are as a result of the present oil price fall.
Not only that, many companies have placed embargo on employment following the rising cost of operation. The development follows the downturn in the global oil market, which has made it difficult for them to make profit and execute new projects.
Mr. Emeka Ene, President, Petroleum Technology Association of Nigeria (PETAN), said these challenges are forcing the firms to restructure their operations. They are facing a cash crunch that has not made them execute new contracts.
Ene said the problems could force many firms out of business if nothing is done.
One of the problems, Ene said, is the directive that oil servicing firms should cut down cost of contract by 30 per cent without considering the implications on their businesses.
He said: “A number of our members, who are trying to cope with the situation, are now laying off staff; others are slashing salaries and no new employment is being generated because there are no new projects to execute.
“Besides, oil exploration and production companies have directed our members to reduce the cost of oil services contracts by 30 per cent. These were the contracts we got when the price of crude oil was over $100. Now we are being ordered to slash the contracts’ cost by 30 per cent, forgetting that we have spent a lot of money to procure equipment for the job.”
Ene said it had been very tough for the industry, which is finding it difficult to mitigate the effects of crashing oil prices.
According to him, operators in the servicing industry were given a blanket instruction, by oil exploration firms, to slash prices of services by 30 per cent instantly.
“ This strategy is short-sighted and focused on destroying Nigerian companies, who are now being forced to either lay off staff or cut down salaries of their workers. The profit margins of these companies during the boom years of $100 a barrel lie between 20 and 30 per cent for the most profitable ones. However, there are firms with lesser profit margins,” he said.
Ene said a greater collaboration, among industry players was expected to enable them manage cost well.

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Gladys Johnson The Publisher/Editor-In-Chief Global Business Drive Phone: +13465619347 Email: info@globalbusinessdrive.com gladysjohnsonmedia@gmail.com gladys@globalbusinessdrive.com globalbusinessdrive@gmail.com

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