January 13, 2015 / 2:33 PM / 4 years ago

UPDATE 1-Tullow to begin oil sector job purge as weak prices bite

(Adds wider sector cuts, background, analyst comment)

By Karolin Schaps

LONDON, Jan 13 (Reuters) - Oil producer Tullow Oil is planning to cut some of its 2,000-strong workforce, a source familiar with the company said, starting an expected avalanche of job losses in the sector as companies struggle to cope with the slump in oil prices.

Oil companies across the globe have been hit by a 60 percent drop in crude prices in seven months, putting them under pressure to find new areas of their businesses where costs can be trimmed.

“Tullow will be a smaller company,” the source said, but gave no indication on the number of jobs likely to be cut.

London-listed Tullow Oil employs more than 2,000 people across 22 countries, with its African operations accounting for half the total workforce.

The company has already cut its capital expenditure plans for this year to $300 million, down from $1 billion invested in the first half of 2014 alone.

It has also placed some of its smaller African offshore drilling projects under review in an attempt to rein in exploration costs.

Ratings agency Moody’s said it expected staff reductions at integrated oil companies this year as part of their efforts to rein in costs.

Analysts at Barclays predicted that oil majors’ capital expenditure will fall by an average of 7 percent in 2015, with a sharper focus on operating expenses, which include salaries.

British oil major BP has already announced a $1 billion restructuring programme that will involve thousands of job cuts. Rival Shell, meanwhile, has said that it will cut 5-10 percent of workers at its Albian Sands mining project in Canada. (Additional reporting by Dmitry Zhdannikov and Ron Bousso; Editing by David Goodman)

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