Technip to cut 6,000 workers amid oil price slump

PARIS -- Technip has announced that in anticipation of an even more challenging environment in oil & gas, it will accelerate its cost reduction and efficiency efforts worldwide through a restructuring plan in response to the downturn in the oil and gas market.

Technip has decided to go substantially further in reducing its direct and indirect cost base while maintaining its strategic direction. The restructuring plan targets savings of €830 million, of which €700 million to be delivered in 2016 and the balance in 2017. There are one-off charges of €650 million to cover all the different aspects of the restructuring.

The Group will reduce its global workforce by approximately 6,000 and will pursue the streamlining of its activities started last year to focus on its core assets and activities. 

Onshore/Offshore

A significant part of the restructuring plan covers the Onshore/Offshore segment and addresses its recent unsatisfactory performance. The one-off cost includes all the direct and indirect consequences of the restructuring plan.

Reduction (including through sales or closures) of its presence in some onshore/offshore markets where profitable business is unlikely even in the medium-term, including selected countries in Europe, Asia and Latin America including Brazil. The one-off cost covers for example asset impairments, lease overhangs and also additional amounts on ongoing projects impacted by this restructuring plan.

Technip has furthermore put aside appropriate amounts on projects where there is a dispute with clients on changes and variations. The Group expects that it will take time to resolve claims on these including for example two refinery projects in Brazil and Algeria (Technip confirms that its involvement has now come to an end on this last project).

In parallel, the Group will reinforce its investment in key geographic and technology areas where for example it has first mover advantage, such as FLNG.

Subsea

Operational performance continues to be solid and the Group confirms the outperformance of this segment in 2015 so far compared to initial expectations. Cost reduction will be in those markets, where new project awards are under pressure (for example the North Sea).

Technip will also further reduce its fleet. The originally planned reductions in the fleet would have reduced it by two vessels this year and now the Group intends to take out a further two vessels, one fully-owned and one leased, taking the fleet down to 23 vessels from 36 at the end of 2013. The one-off cost includes the associated impairment costs.