French oil industry engineering and construction group Technip will cut 6,000 jobs and book a 650 million euro restructuring charge as it steps up cost-cutting. As Amy Pollock reports it's partly due to low oil prices, which hit a five month low on Monday largely on concerns over China.
Offshore energy giant Technip has been hit hard by low oil and gas prices. So hard, the French company will cut 6,000 jobs and book a one-off charge of 650 million euros. As oil prices steadied after dropping more the six percent on Tuesday, Technip cut its profit forecast for its Onshore/Offshore business, which builds oil rigs, refineries and LNG plants. That's down to its clients scaling back exploration projects. A big concern for oil and gas services companies according to Hargreaves Lansdown's Richard Hunter. (SOUNDBITE) (English) HEAD OF EQUITIES, HARGREAVES LANSDOWN, RICHARD HUNTER, SAYING: "It obviously takes oil to excavate oil, and while the oil price is so low, the fixed costs obviously have to be borne with. So it's a very difficult time for exploration companies in terms of the big oil majors, even though there are pluses to it on the consumer side." Although Brent and U.S. crude has seen a recovery, the outlook remains bleak. A global oil supply glut combined with weak demand looks set to continue as key consumer China faces stock market turmoil. While many have been distracted by Greece, Chinese equity markets have fallen 30 percent since June, leading to government intervention to prop up share prices. (SOUNDBITE) (English) HEAD OF EQUITIES, HARGREAVES LANSDOWN, RICHARD HUNTER, SAYING: "Chinese GDP, while still a high figure, is also on the decline, so there are wider concerns as we've seen through the commodity prices, for example, that Chinese demand is waning." Even more crude could soon flood the market. Iran and major powers are on course to reach a nuclear compromise in Vienna that could end sanctions and open up Iranian exports.