Calgary-based Nexen Energy ULC is slashing its work force by 400 employees as it absorbs a reduction in its capital budget adopted by its Chinese state-owned parent company, CNOOC Ltd., of between 26 and 35 per cent in response to falling oil prices.
The layoffs include 300 jobs in Canada – primarily in Calgary – and come 27 months after Ottawa approved CNOOC’s acquisition of Nexen for $15.1-billion while extracting a promise to maintain staffing levels. The company will also cut 40 positions in the United States and 60 in Britain, where Nexen operates North Sea production.
In an interview, Quinn Wilson, Nexen senior vice-president for human resources and corporate services, said the company is living up to the promises it made when the takeover was approved.
“We are fully compliant with the Investment Canada undertakings,” Mr. Wilson said. “I’m not able to speak to specific undertakings – they were commitments between CNOOC Ltd. and the Canadian government. I can say we are still compliant and we are committed to remain fully complaint.”
A spokesman for Industry Minister James Moore said Ottawa is aware of Nexen’s layoffs and will look into the matter.
“Our thoughts are with the employees and families who received this difficult news today,” Mr. Moore’s spokesman, Jake Enwright, said in an e-mailed statement. “Industry Canada is reviewing the announcement and will ensure compliance with the Investment Canada Act.”
In an interview with The Globe’s Nathan Vanderklippe in China 15 months ago, a senior CNOOC official complained about “problems of human resources” at Nexen. Chen Wei Dong, CNOOC’s chief energy researcher, noted merged companies typically make major staff reductions to gain efficiencies whereas, he added, CNOOC had promised “no reduction in manpower” to obtain approval.
CNOOC has joined oil companies from around the world in slashing capital budgets and laying off staff since the crude price plunged by some 60 per cent since last June.
Mr. Wilson said the company believes crude prices could remain depressed for 18 to 24 months and has to respond with capital discipline.
The layoffs represent 13 per cent of Nexen’s total employee base, and 14 per cent of its Canadian work force.
While Nexen has increased its oil sands production by 40 per cent since 2012 by improving the performance of its key Long Lake property, Mr. Wilson said that rate of growth cannot be sustained with the budget cuts.
The company has also brought into production the North Sea Golden Eagle project, on time and on budget, though further North Sea investments will also be curtailed.
Nexen chief executive officer Fang Zhi said CNOOC remains focused on stable, long-term growth and remains committed to its Canadian subsidiary.
CNOOC’s “rationale for acquiring Nexen remains the same – it was not made with a short-term view, but rather to acquire, and responsibly develop long-term, quality resources,” he said.Report Typo/Error