Maersk Drilling Announces Up to 300 Layoffs in North Sea Region

Image courtesy Maersk Drilling

Published Apr 24, 2020 10:00 PM by The Maritime Executive

On Friday, offshore rig operator Maersk Drilling said that it would be taking steps to "adapt [its] offshore crew pool" to the changing level of demand in the North Sea market. 

The COVID-19 pandemic and the lower oil price environment are impacting offshore drilling activity for all operators, including Maersk Drilling. Last week, the company announced that two clients have given notice of early termination for its rigs. BG International, a subsidiary of Shell, has terminated the contract for the semi-submersible Mærsk Developer with immediate effect. Aker BP has also terminated the contract for the jack-up rig Maersk Reacher, which was hired for accommodation services on the Valhall field. 

For both of these contracts, Maersk Drilling expects to receive compensation in the form of early termination fees, so the financial impact is expected to be small. However, the required crewing levels for inactive rigs are much lower. 

In light of the current outlook, Maersk Drilling said that it intends to stack a number of its North Sea rigs. This means a reduction in the offshore crew pool, and Maersk Drilling has begun consultations with trade unions and employee representatives about redundancies in Denmark, Norway and the UK.

“Though it’s standard practice in our industry to adjust our workforce to activity levels, it never feels right to say goodbye to good colleagues, especially when so many have walked the extra mile to keep operations running in these very difficult circumstances. However, it’s our responsibility to safeguard our business and we are now taking steps to maintain competitiveness in the challenging market environment,” says CEO Jørn Madsen.

Maersk Drilling expects that the consultations will lead to a total of 250-300 redundancies in the North Sea crew pool. The consultation processes will follow the timelines laid out by local regulations in Denmark, Norway and the UK.