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UPDATE 2-ConocoPhillips to lay off 300 in Canada oil sands pullback
May 4, 2017 / 9:20 PM / 7 months ago

UPDATE 2-ConocoPhillips to lay off 300 in Canada oil sands pullback

(Adds comment from government on internal briefing note)

By Ethan Lou

CALGARY, Alberta, May 4 (Reuters) - ConocoPhillips will lay off 300 Canadian workers after selling most local assets to domestic crude producer Cenovus Energy Inc, the Houston-based company said on Thursday.

ConocoPhillips in March agreed to sell oil sands and western natural gas assets to Cenovus for C$17 billion ($12.4 billion), making it the latest international oil major to pull back from a region beset by high costs and low crude prices.

Norwegian oil company Statoil ASA, which late last year agreed to sell Canadian oil sands assets to local producer Athabasca Oil Corp, has also shed staff, a spokesman said on Thursday, without disclosing the precise number.

The resulting layoffs will pile on to the high unemployment rate facing oil-producing Alberta province after the two-year crash in commodity prices. The unemployment rate was 8.4 percent in March, slightly down from months earlier, but still at a level not seen in more than 20 years.

The government of Alberta has been publicly firm that the asset sales are good news as buyers have been domestic companies eyeing expansion. But privately, in written advice to Energy Minister Marg McCuaig-Boyd days after the Cenovus deal, a senior civil servant conceded one negative aspect in the “financial and labour impact” of the exodus.

“Some energy jobs may be at risk because such mergers and acquisitions yield duplications and redundancies,” according to the government briefing note, seen by Reuters under freedom-of-information laws.

Asked about the note, Alberta Premier Rachel Notley said job losses are a cost of consolidation, although she does “not necessarily” anticipate more layoffs. The province is working hard to seek export markets for its landlocked energy products to ensure the sector’s long-term stability, she said.

ConocoPhillips spokesman Rob Evans said the layoffs will be mostly in the Canada’s oil capital of Calgary, Alberta, and will occur by mid-May. The company had more than 2,000 staff in Canada as of late 2015.

Global energy majors have sold off more than $22.5 billion worth of Canadian oil sands assets so far this year to domestic companies.

Royal Dutch Shell, which in March agreed to sell most oil sands assets for $8.5 billion to Canadian Natural Resources, said at the time that layoffs among head office employees and technical staff were possible.

Shell spokeswoman Tara Lemay on Thursday declined to provide a precise figure, saying most workers will be kept on and those laid off are eligible to apply for positions within Shell globally.

$1 = 1.3726 Canadian dollars Editing by Lisa Shumaker and Tom Brown

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