LEADING PNG petroleum company Oil Search Ltd has released details of a plan to reduce its workforce by 34% in light of the industry downturn.
The company, which recently completed a detailed and systematic review of its organisation and cost structure, which came up with some significant findings, including:
- Oil Search Full Time Employees (FTEs), which include employees and long-term contractors, have been reduced from 1,649 people as of March 14, 2020 to 1,222 currently, with a further 137 people transitioning out by year end. This will represent a fall in the total workforce of approximately 34%. Reductions have been made across all locations.
- Oil Search’s female representation in the workforce will increase from 25% to more than 28% as a result of the reorganisation and women will represent more than 28% of the executive management team. In addition to female diversity, there has been a material increase in the representation of PNG citizens in senior positions.
- Other cost reduction and continuous improvement initiatives are being coordinated under Pathfinder, including third-party spend reduction programmes, an operational excellence initiative in the field, an efficiency enhancement programme, the application of technology and data gathering to drive costs lower and benchmarking for setting continuous improvement targets.
Oil Search’s managing director, Dr Keiran Wulff, said the painful decisions the company has taken to optimise our organisational structure, enhance efficiencies and reduce operating costs have not been made lightly.
“They are the result of extensive studies aimed at ensuring we have an organisational structure that not only makes us more resilient to oil and gas price fluctuations but also embeds a culture of continuous improvement, operational excellence and strict fiscal discipline.
“We have reviewed how to make our company stronger by prioritising activities and focusing on the capabilities that are required for us to be successful under a range of economic conditions.
“The work undertaken has been assessed against an independent domestic and international industry organisational benchmarking study to ensure Oil Search’s new cost structures are competitive with global energy industry peers.
“In addition, the review incorporated employee efficiency and productivity analysis, capability reviews and studies on risk management, leadership and decision- making effectiveness.
“Oil Search’s reorganisation also builds further on our commitment to social responsibility and sustainability.
“We will emerge from the recent challenges more resilient while retaining all the capabilities required to operate our production assets safely and efficiently, with a strong platform for progressing our growth projects when conditions allow.
“Major workforce reorganisations are always extremely challenging. This process has been made even more difficult given the current circumstances of COVID-19.
“We are committed to treating our people with care and respect, providing generous termination payments and are implementing a strong post-employment support structure for those who are leaving Oil Search to help them reskill and transition towards new opportunities.
“We know that Oil Search’s current market position, reputation, high quality asset portfolio and future growth opportunities are a result of the contributions from past and present staff and we appreciate their efforts.
Under the new structure, there is a material increase in executive and senior leadership opportunities for PNG nationals, which is in line with the evolving dynamics in PNG and increasing importance of citizen representation.
“Expatriate positions in PNG will be reduced from 10% to 7% of the workforce. In addition, gender diversity has increased, with women now representing more than 28% of the workforce, from 25% previously.
“This has been aimed at ensuring that the Company not only has the resilience, capabilities and financial strength to withstand a prolonged period of subdued oil prices, but is also optimally positioned to operate its production assets safely and cost efficiently and progress its world class growth opportunities in Papua New Guinea and Alaska when market conditions allow.”