Some 236 Ghanaian employees in the oil and gas sector have lost their jobs whereas others have taken pay cuts since May this year, due to the impact of the COVID-19 pandemic on global oil production.
This is just a fraction of the about 2,000 Ghanaian employees in the sector, out of which nearly a thousand are unionized staff.
The drop in oil prices amidst the COVID-19 pandemic largely due to low demand caused by lockdowns and a drop in manufacturing activities, has not only affected jobs and profit margins, but also the projected revenue of governments from the industry.
In March this year, a price war between Saudi Arabia and Russia, coupled with the pandemic, caused oil prices to drop to about US$28 per barrel, the lowest in four years.
Currently, the prices hoover around 35 dollars, which is below the target for the industry. In June this year, a research by the Petroleum Equipment and Services Association found that employment in the oilfield services and equipment sector fell by nearly 15,000 jobs in May, bringing total job losses due to pandemic-related demand destruction to more than 84,000.
Oilfield services employment is down 105,000 jobs from May 2019, and now stands at its lowest point since 2016. The jobs lost represent estimated annual wages of approximately $11.4 billion.
Industry analysts anticipate additional job losses in the coming months as the oil and gas industry continues cutting production by shutting in wells and reducing rig counts.
It is this reality in the sector that is being felt in Ghana. Aside from the 236 Ghanaians who have lost their jobs so far, the Oil and gas companies operating in the country have also discharged some expatriate staff, in the hope that these redundant workers may be recalled when activities in the industry pick up.
The General Secretary of the Petroleum, Transport and Chemical Workers Union of the Trades Union Congress, Alhaji Fuseini Iddrisu, who confirmed these layoffs to Citi Business News, says the Union has negotiated the appropriate benefits for the affected workers.
“Some have suffered cuts in salaries while others have been asked to go home while the situation improves. There are many job losses that we have so far. MODEC for instance was the first organization that hinted that they wanted to lay off workers. We engaged them and looked at the pros and cons of it and we finally agreed that twelve workers had to go. We also engaged management for a substantial package for them. They were also given the assurance that when the industry picks up they will be re called. We even signed an MOU to cover this. We also suffered the same thing with Schlumberger. We had a capital loss of 76 employees but we were able to negotiate for a good package for them,” he said
Meanwhile, the Union is still negotiating with other oil companies who are in the process of laying off more workers. The Union is however concerned about the uncertainty ahead for the industry as it remains unclear when the global health and economic crisis will come to an end.
“For Tullow, we struggled very, very hard to get them unionized. It was only at the point when they were given the signal that they were going to suffer redundancies that they made attempts to come to us. By then it was too late. But we are still knocking at their doors to make sure that those workers who are left join the union. Also because of the local content we have now, the government’s concentration is to build the local expertise. But frankly speaking, the companies ensured that some expatriates also left before they came to the local staff” he said.
“The situation is a big worry to as labour since we don’t know when this will end. Our revenue as been affected because we run based on dues so if these guys have been asked to go home, then that’s a big blow to us. But so far we have been able to pay our staff and we hope things will get better” Alhaji Fuseini Iddrisu added.
25% of Tullow Ghana workforce to lose jobs due to 2019 production challenges
Earlier this year, Tullow Oil Ghana reduced its workforce by at least 25 percent due to Tullow Oil Plc’s massive disappointments in operations Africa and South America.
The planned restructuring process, Bloomberg notes, is likely to lead to nearly 40 percent loss of the workforce in its Kenya operations as well as the shut of offices in Dublin, Ireland and Cape Town, South Africa.
The ongoing global redundancy process will lead to the departure of 35 percent of Tullow Ghana’s senior leadership as well as overall 25 percent job losses for staff made up of both Ghanaians and expatriates.