In response to continuing cost and efficiency challenges affecting the UK North Sea oil & gas sector, Wood Group PSN (WGPSN) announced plans to reduce the rates paid to approximately a third of its UK-based limited company contractors by an average of 9%, in line with competitive market rates.
"This is not a decision we have taken lightly, but we believe it is the right one to proactively meet the continuing cost and resourcing challenges affecting the UK North Sea oil and gas sector. Our focus and commitment remains on contributing to the industry’s long-term sustainability," said James Crawford, managing director of WGPSN in the UK and Africa.
"This adjustment to the rates we pay our UK contractors ensures we continue to be competitive within the marketplace. We highly value our contractors and this measure will allow us to sustain our relationship with these talented people, whilst taking appropriate measures to improve efficiency and reduce cost for our customers."
This latest adjustment to contractors’ rates follows a 10% decrease in UK onshore contractors’ rates made in May, 2014 and a further up to 10% decrease in UK contractors' rates made by WGPSN in December, 2014.
More than 7500 people work for WGPSN in the UK, including approximately 600 contractors.
Many oilfield service companies (including most recently, Baker Hughes) have announced the same types of supplier discount, or supplier rationalization programs in 2016 in direct response to the the challenging oil price environment.