Another job cull at Woodside
Employees across Woodside lost their jobs today, with many more expected to follow, as chief executive Meg O'Neill chases a 30 per cent cut in operating costs.
Woodside today began what is expected to be a week of redundancies, and employees anticipate another round after the completion of an organisational review.
Boiling Cold understands from numerous sources that many areas of the LNG player lost employees today, including the logistics, exploration, geoscience, reservoir management and new markets teams.
The New Markets team is responsible for creating new business opportunities and has worked on trucking LNG to the Pilbara and hydrogen.
There was no official communication from Woodside management to its workforce about the redundancies.
Woodside made about 300 permanent employees redundant in October 2020 after ending several hundred contract positions in March 2020 when the COVID pandemic caused oil and gas prices to plummet.
In May, Woodside interim chief executive O'Neill told investors Woodside needed a "laser-like focus on cost management" to remain competitive and said she would target a 30 per cent reduction in operating costs.
Some employees expect another round of redundancies in late 2021 or early 2022 when a review of Woodside's organisation is completed.
Employees contacted by Boiling Cold expect the job losses to number at least several hundred.
Peter Milne
Woodside is cutting its workforce as it faces numerous challenges over the next six months.
The company has targeted a final investment decision on the $US11.4 billion Scarborough project this year to offset declining production from the North West Shelf and a fall in Pluto output later this decade.
However, it first has to sell down its 100 per cent equity in a second LNG train at Pluto and, ideally, some of its 63.5 per cent interest in the Scarborough gas field.
There are several warning flags for potential buyers of equity in Scarborough or Pluto.
Last week Japan proposed slashing its LNG consumption by almost 50 per cent by 2030, a move that BlombergNEF analyst Olympe Mattei estimated could decrease demand by 25 million tonnes a year.
A softer market will depress prices and give buyers less incentive to sign long-term contracts traditionally used to reduce the risk of investing in new LNG production.
The cost of building a second LNG train at the Pluto LNG plant to process the gas from Scarborough is under pressure from one of the tightest labour markets the WA resources sector has seen as a mining boom hits a COVID-driven immigration clampdown.
There is also uncertainty about the approvals for the Pluto expansion, with a Supreme Court challenge by the Conservation Council of WA unlikely to be determined this year.
Perhaps the biggest challenge is a perception widely held in the industry that minor Scarborough partner BHP lacks enthusiasm for the project leading to speculation about a wider deal between the two companies to unblock the impasse.
The company is navigating these problems without a permanent chief executive after Peter Coleman ended his decade-long tenure unexpectedly early in April.
Woodside did not respond to questions from Boiling Cold.
Chevron, WA's other big LNG operator, cut its workforce by 20 to 30 per cent in 2020.
Main image: Woodside headquarters Mia Yellagonga in Perth. Source: Woodside Energy Limited