Matt Chambers, 18/5/16

Oil giant BP has slashed up to 1000 Australian jobs in the past year, mainly in Victoria, Queensland and Western Australia, as it slims down to focus on fuel retailing in the face of competition from global trading giants.

While 355 of the jobs are associated with the closure of the ­Bulwer Island refinery in Brisbane in May last year and others with outsourcing maintenance to UGL, the cuts are more severe than ­observers expected and are indicative of the major restructuring under BP Australia president Andy Holmes.

Accounts filed last week with ASIC reveal BP Australia now employs 5514 people, down from 6624 a year ago when the local unit’s 2014 accounts were lodged.

An unspecified number of the 1110 jobs — thought to be less than 200 — have been transferred to a joint venture with contractor UGL, while 35 went with the sale of the company’s bitumen business.

“BP has made significant strategic changes to its business in Australia over the past 18 months to increase its competitiveness and strengthen its position as a leading fuels retailer,” a spokeswoman at the company’s local headquarters in Melbourne said yesterday.

She said the strategic changes included the UGL contract and partnerships with other operators.

“Like many strategic decisions, this resulted in roles being transferred from BP to other operators and a smaller team in place to support a more focused business.”

A year ago, at the time of the UGL joint venture, Mr Holmes told The Australianthere would be a reorganisation of the Melbourne head office as he set about growing BP’s retail business, which observers believe had suffered from ­underinvestment in recent years.

“This is not a restructuring, it’s a complete repositioning to make sure we are able to focus our investment towards our ­customers,” Mr Holmes said. As more Australian refineries have closed in recent years and petrol imports have risen, the world’s biggest traders have moved in, in partnership with OPEC members, to shift refined fuel around the world.

Holland’s Trafigura, the world’s third-biggest trader, runs Puma Energy (with Angola’s ­national oil company as a minor partner).

Its compatriot, Vitol, the world’s second-biggest trader, runs Viva Energy (with the United Arab Emirates as a minor partner) and has bought Shell’s local branding rights.

After the closure of Bulwer Island, BP still owns the Kwinana oil refinery south of Perth and ­nationwide fuel importing and distribution networks, including petrol stations.

Under Mr Holmes, 75 per cent of the company’s $150 million ­annual capital budget is now focused on the retail business, in a shift forced by growing competition in the Australian fuel market.

BP also has a one-sixth non-operating interest in the North West Shelf joint venture in WA and has plans to drill in the Great Australian Bight this summer.

About 355 job losses were flagged when BP announced the Bulwer Island refinery would close, while another 70 company job cuts (along with 90 contractor jobs) were announced at Kwinana earlier this year, accounting for 425 of the staff cuts.

Other job cuts were a result of a decision to contract UGL to operate and maintain BP’s 17 fuel terminals across Australia and other joint ventures.

BP would not say how many roles had been transferred and how many had been made redundant.

UGL would not say how many people are working on the BP joint venture, but it is understood to be many fewer than the nearly 700 jobs unaccounted for by cuts at the Bulwer Island and Kwinana refineries.

According to the linkedin.com page of the joint venture, Australian Terminal Operations Management, it employs between 51 and 200 people.

BP’s bitumen business, which employed 35 people in Brisbane, Townsville, Altona and Hobart, was sold to fuel trader Puma Energy last year.

The BP accounts reveal the sale price was $78m, lower than many in the industry had expected.

Despite sliding oil prices, BP Australia’s 2015 net profit after tax rose to $670m, from $527m in 2014. The increased profit came in the face of a 29 per cent fall in revenue to $15.82 billion.

The company’s Australian tax expense rose from $226m in 2014 to $280m this year.

BP is tipping a tough 2016.

“Prices are expected to remain low at least through the near term and input cost deflation is expected to lag the oil price decrease, resulting in continuing pressure on margins,” BP Australia said.

Extracted in full from The Australian.