By Kjetil Malkenes Hovland
OSLO--Bilfinger SE's (GBF.XE) Norway branch said Tuesday it was
cutting a third of its staff in the country, blaming cost-cuts that
hurt the country's oil-service industry.
Bilfinger Norway said it would lay off 600 out of its 1,900
staff, because of planned reductions in activity on several
offshore and onshore facilities, on the back of reduced investments
and budget cuts in 2014 and 2015.
Oil companies operating in Norway expect their spending to dip
next year, after years of double-digit spending growth.
"What happens in 2015 is a dip," said Dag Aarnes, a director at
Norway's main employer organization, the Confederation of Norwegian
Enterprise, or NHO, which expected oil investments to drop
significantly next year before rebounding in 2016. "A pause may be
the right term."
The NHO expects a 10% drop in oil investments next year, a
reduction of about 25 billion Norwegian kroner ($3.94 billion),
with "significant ripple effects for the Norwegian economy." Oil
has been a growth factor for Norway, so 2015 will be a weaker year
for the economy, said Mr. Aarnes
Other oil-service firms in Norway have also announced cuts.
Aibel has said it will shed 480 jobs from around 6,000 staff, FMC
Kongsberg said it would lay off 130 of its 2,500-strong workforce,
Weatherford plans to shed nearly a fifth of its 550 staff, and Aker
Solutions ASA (AKSO.OS) said recently it planned to reduce its
28,000 staff by 225.
"We feel that oil companies have cut maintenance programs too
quickly and heavily," said Roger Berg-Hansen, union representative
of the United Federation of Trade Unions at Bilfinger Norway. He
said he hoped the government could help.
Norway's dominant oil company, state-controlled Statoil ASA
(STO), said in February it was scaling back on planned investments
and cutting costs in order to boost shareholder value. The company
has outsourced and reduced some of its own staff, and plans further
cuts.
"This started in February, March, when Statoil delayed and
scaled down maintenance contracts," said Knut Sunde, a director at
employers' organization, the Federation of Norwegian Industries.
"Since then, it's just developed in a more and more negative
direction."
Oil companies expect investments to rebound in 2016 on the back
of new projects, especially the giant Johan Sverdrup field in the
North Sea.
"What's intriguing, now that the oil price is dropping below
$100 per barrel, is whether this will lead to further rounds" of
spending cuts or delays, said Mr. Sunde. "Some projects are less
robust than others."
Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@wsj.com
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