Rates for contractors working in the North Sea will be cut in order to stay competitive, oil services company Wood Group says. Photo courtesy of BP
ABERDEEN, Scotland, Feb. 19 (UPI) -- British energy services company Wood Group said Friday it was cutting rates paid to its North Sea contractors because of negative market pressures.
Rates paid to about a third of its British-based contractors will be cut by around 9 percent in response to what Wood Group said were cost and efficiency challenges in the North Sea oil and gas sector.
"This is not a decision we have taken lightly, but we believe it is the right one to proactively meet the continuing cost and resourcing challenges affecting the U.K. North Sea oil and gas sector," James Crawford, a managing director for Wood Group, said in a statement.
British energy company BP said in mid-January it would trim around 600 from its payroll to ensure it remains competitive in the North Sea environment. Mark Thomas, a regional president for North Sea operations, said maturation of North Sea reserve basins made for challenging conditions.
In December, industry group Oil and Gas U.K., said there were signs of life in the regional energy sector, but those signs shouldn't mask the underlying risks facing the industry moving forward into 2016.
Wood Group's rate reduction follows a 10 percent decrease for onshore contractors in 2014. Crawford said additional cuts would give the company the room needed to move through the market downturn.
"This adjustment to the rates we pay our U.K. contractors ensures we continue to be competitive within the marketplace," he said.