Oilfield services operator lets 300 contract staff go

KUALA LUMPUR: Malaysia’s offshore drilling and oilfield services contractor UMW Oil & Gas Corp Berhad (UMWOG) has cut nearly 300 jobs.

However, this only involved contract staff in rig operations, not permanent staff. The job cuts are due to a lack of new jobs, necessitating a need to streamline its workforce to combat the downturn in oil prices.

“We did not renew their contracts when they expired, mostly on the operation side, as when the rig is not operational, we have to let go (contract staff),” Bernama quoted UMWOG President Rohaizad Darus as saying after the company’s annual general meeting here.

The company has 736 employees, about a third of whom are contract staff. Five of the company’s eight drilling rigs are awaiting contracts, The Star reported.

UMWOG revealed it had no intention of renewing the contracts of expatriates when their terms expired.

In addition, the company is looking into the possibility of implementing a reduction in staff benefits and remuneration. This follows a 40 per cent reduction in senior management’s remuneration in 2015, compared with 2014, Bernama reported.

“We try not to impact the lower (level) workers, because we understand the rising cost of living in this country now and we do not touch managers and below,” Bernama quoted him as saying.

Meanwhile, UMWOG’s other cost-cutting measures include a reduction in inventory and capital cost, negotiations with vendors, and improvement in company processes. Cost reduction measures have resulted in more than RM18 million in savings in the first three months of this year.

The Star quoted Rohaizad as saying he was confident that the recent rebound in crude oil prices marked an upturn in the fortunes of the oil and gas industry and that it would pave the way for better earnings for the company this year.

It said UMWOG had bid for RM2.52 billion worth of jobs for its fleet of drilling rigs. Out of the 22 tenders it was participating in, 48 per cent were domestic contracts, with the rest in international waters.

“We are making new inroads into the Middle East with two contracts in the tender book, plus we should be able to obtain approvals soon to bid for new jobs in both Kuwait and Saudi Arabia. We see more tenders coming out in this region soon,” the Star quoted him as saying.