Texaco Cuts Jobs in ‘Critical Period’

The oil industry will endure at least another year of anemic prices leading to layoffs, such as those announced Thursday by Texaco Inc., and reductions in capital spending, executives said at an industry gathering in San Francisco.

“This is a critical period for the industry,” Peter Bijur, Texaco’s chief executive, told fellow oil executives at this week’s annual meeting of the American Petroleum Institute, the industry’s trade group. “Perhaps at no time in a half-century have we faced the challenges of the magnitude of today.”

White Plains, N.Y.-based Texaco announced plans to cut costs by $200 million a year through layoffs of about 1,000 employees and contractors in its worldwide exploration and production business, known as “upstream” operations in industry jargon. Texaco has about 8,000 upstream employees and contractors worldwide. Texaco’s overall work force totals about 19,000 employees.

In California, Texaco employs nearly 1,000 upstream workers, primarily in Kern County. The distribution of the cuts is still being determined, but no particular geographic areas are being targeted or spared, a spokeswoman said.

The industry is suffering because crude oil prices are down about 50% from a year ago, the result of reduced demand by economically troubled Asian countries and overproduction globally.

Economists are projecting that oil prices will remain at current levels of about $14 a barrel for at least a year. In 1986, oil prices plunged to $10 a barrel but rebounded after a few months.

“We’ve taken more than our share of hits this year, such as the world financial crisis, meteorological anomalies, OPEC disagreements over production levels, plunging oil prices, falling natural gas prices and poor chemical margins,” H. Laurance Fuller, chairman and chief executive of Amoco Corp., told the gathering. “It is a period of great shifting and sorting out . . . of great potential successes and great potential pain.”