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UMW Oil and Gas Corporation (UMWOG) has cut nearly 300 jobs, mainly in rig operations, due to low crude oil prices.
The terminations are part of a group-wide-cost cutting exercise to address operating costs, according to a report by The Star Online.
The firm’s president, Rohaizad Darus, said in the report the headcount reduction comprised workers who were on a contractual basis. The company currently has 736 employees, about a third of which comprise contract staff.
Following the company’s annual general meeting in Kuala Lumpur on May 17, he told reporters: “We have made the necessary rationalisations via the reduction in manpower, re-negotiations with our vendors, and reduction in capital costs. We are looking at more reductions, and we have already saved some RM18mil in expenses during the first quarter alone.”
Moving forward, Rohaizad noted that further layoffs in the organisation’s workforce will be based on the job flow, as mentioned in the report.
“We are going to try to reduce it by a little bit more, but it will be focused on the contract staff and not permanent ones. This includes non-renewals of existing contractual personnel,” he said.
The Star Online reported that five out of the company’s eight drilling rigs are currently awaiting contracts.
In a separate article by Bernama, Rohaizad said that when the rig is not operational, contract staff will not have their contracts renewed when it expires. He added that UMWOG will also not renew the contracts of expatriates when their terms expire.
At the same time, the company is also looking at reducing the benefits and remuneration of its employees.
Compared to 2014, Rohaizad pointed out that remuneration for senior management in 2015 went down by as much as 40%.
“We try not to impact the lower (level) workers, because we understand the rising cost of living in this country now and we do not touch managers and below,” he said.
“Other cost-cutting measures in the rationalisation plan include reduction in inventory and capital cost, negotiation with vendors, and improvement in UMWOG’s processes,” Bernama wrote.
“For the first three months of this year, we managed to reduce our costs by more than RM18 million.
“We need to ensure that we are efficient in terms of cost, to operate at the best level, and are able to offer competitive prices,” said Rohaizad.
According to a press release by UMW Oil and Gas Corporation, the company made a revenue of RM839.9 million in financial year 2015, ending on 31 December 2015, 17.2% lower compared to 2014.
It stated that the company saw a loss before tax of RM348.4 million in FY2015 compared to the profit before tax of RM284.2 million achieved in 2014.
Human Resources reached out to UMW Oil & Gas for a statement, but was unable to receive it before this article was published.