Oil Search to cut down size

 OIL Search Ltd says it may reduce investments that are non-core to the company following results of its recent strategic update and business optimisation studies.

Managing director Peter Botten in a statement yesterday said this work was carried out over the last three months in response to the sharp fall in global oil and gas prices, which declined by over 60 per cent over past 12 months and were likely to take a number of years to recover. 

“The Business Optimisation Programme (BOP) has identified that parts of our business need to become more efficient, in the light of materially lower likely future revenues, and that investment in some areas, that are non-core to Oil Search, should be reduced,” Botten said. 

“The optimisation programme provides a number of initiatives which will make our business sustainable in a period of low oil and gas prices, while supporting our continued growth objectives. Although oil and gas prices will inevitably rebound at some time in the future, it is not possible to say when, so our business must now adjust to the new environment,” he said. 

Botten said as part of this programme, Oil Search, in line with other oil and gas companies, must reduce its costs and become more efficient in what the company does. 

“Regrettably, this means that there will be a number of redundancies from our business across all our offices and operations. A number of people will also be asked to relocate to other parts of the business. 

“This is always a difficult time, as we are dealing with people and their families, with some employees being long term contributors to Oil Search. 

“All people impacted by these changes will be treated with the utmost respect, provided severance entitlements, social support and professional help to find new jobs, when they wish to. Our Port Moresby head office will almost double in size, with people transferred from field operations, Brisbane and Sydney to build our commercial, planning, operations and support functions.

“We will also establish a major learning function and innovation hub in Port Moresby, to help develop our national workforce to leadership positions throughout the Company.

“Investment in appraisal and exploration in PNG will grow, with at least 11 wells planned in our oil and gas operations over the next 18 months, subject to oil prices. Various programmes, such as power developments in the Highlands and Morobe, will receive higher investment, while our Foundation will expand its operations in health to areas of education and various women’s programmes around the country. 

“It is a period of change in Oil Search, but it is essential that, in the current volatile operating environment, we make our business sustainable and one that can continue to grow in PNG. 

“We are totally committed to continuing to growing our Company in this country and playing our role in building this nation.”