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Technip slashes 6,000 jobs in $916m restructuring

Technip slashes 6,000 jobs in $916m restructuring
Forecasting worse times for the oil and gas industry, Technip has announced a restructuring with a savings target of EUR830m ($916m).

The company has noted irrational behaviour in project bidding on the reduced number of projects being sanctioned. Some negotiations have even come to a halt and will be settled through legal processes. "We conclude that these trends have not improved and, in some cases, have actually worsened over the last two months," the company stated in its restructuring announcement.

The restructuring is intended to save EUR700m in 2016, and a further EUR130m in 2017. The initiative will mean the loss of 6,000 staff from the group's global workforce, and one-off charges of up to EUR650m.

Operations in certain countries in Europe, Asia and South America, "including Brazil," are to be stopped or sold off where there is little chance of turning a profit in the medium term.

Technip said it expected its offshore/onshore business to be "significantly more profitable" in the second half of the year compared to the first half with an adjusted underlying operating income of EUR140m - EUR160m.

Investments will be reinforced in areas where the company has an advantage, including its FLNG activities.

For the subsea fleet, reductions will be focussed on areas where the market is under pressure, such as the North Sea. Two vessels will be removed from the subsea fleet, further to the two announced in previous cost-cutting measures. This will take fleet to 23 vessels compared to 36 at end of 2013.

Thierry Pilenko, Technip chairman and ceo, commented: “The slowdown in the oil and gas industry is prolonged and harsh. Therefore we have decided to accelerate our cost reduction and efficiency measures – which I know will have tough consequences for employees across the group."