Danny Forston, 01 February 2016

The carnage unleashed by the crash in crude prices will be laid bare this week when Britain’s ­biggest energy companies unveil plunging profits, billions in write-downs and thousands of job ­losses.

Bob Dudley, chief executive of BP, is set to reveal in the annual results tomorrow that its profits collapsed in the fourth quarter to $US730 million ($1 billion), two-thirds down on the same period last year. He is also likely to be forced to take a multibillion-dollar write-down on the value of the company’s assets to reflect the oil price, which has fallen from $US115 a barrel 18 months ago to $US36 on Friday.

BP announced this month that it was shedding 4000 jobs in its exploration arm as part of a radical plan to shave $US6bn from its annual budget by next year. Similar cuts are expected at its rivals as they struggle to cope with the weak oil price.

Royal Dutch Shell, whose shareholders approved its £36bn ($55bn) takeover of rival BG last week, has already laid out plans to cut 10,000 jobs once the mega-deal is finalised next month. Chief executive Ben van Beurden has also pledged to sell $US30bn in assets.

Shell reveals its annual results on Thursday. Analysts have pencilled in a 57 per cent drop in profit for the three months to December to $US1.8bn. For the year, Mr Van Beurden is expected to announce a $US10.8bn profit, a 40 per cent decline from 2014. Despite the pain, both BP and Shell are expected to maintain their dividends.

Cheaper petrol and falling household energy bills have been a boon for the economy, but ministers are growing increasingly alarmed at the destruction wrought on the industry by crude’s extended swoon. Last week, David Cameron flew to Aberdeen to unveil a £20m package of measures aimed at reviving North Sea exploration, which has plunged to a 50-year low.

THE SUNDAY TIMES

Extracted in full from The Australian.

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