Woodside Petroleum has cut the number of people working at its Karratha gas plant, with the decision flowing through to hundreds of contractors at companies such as Monadelphous and UGL.
The oil and gas producer confirmed today it has deferred maintenance and refurbishments works at the gas plant so it can focus on sustaining production.
It declined to specify the number of people affected. This move comes after Woodside cut staff at its offshore platforms at the end of last week.
Chevron has also confirmed it is reviewing maintenance activities at its WA operations, which include the Gorgon and Wheatstone LNG plants.
"We are working through plans to de-mobilise non-essential contractor personnel at our natural gas sites," a spokesperson said.
"We do not take these measures lightly and understand the impact this will have on some of our workforce."
The Australian Manufacturing Workers’ Union (AMWU) has estimated more than 5,000 jobs will be lost by the end of the week as a result of Woodside's and Chevron's decisions.
The AMWU said workers employed by a number of contractors and labour hire providers had been informed by both Woodside and Chevron that non-critical maintenance workers will no longer be needed on their sites.
AMWU state secretary Steve McCartney said this was going to have a huge impact on the already rapidly increasing unemployment rate in WA.
“These LNG sites are still running at 100 per cent capacity so it is hard to understand why the decision to cut contractors has been made, if there is no impact to the company’s bottom line," he said.
Contractors affected by the decision include Monadelphous, and a UGL Altrad Services joint venture.
Monadelphous managing director Rob Velletri outlined sweeping changes today in a memo to staff that has been seen by 'Business News'.
“A significant number of our customers have suspended, deferred or significantly reduced our contracted services across a range of our projects and worksites,” Mr Velletri said.
“The effect these disruptions are having on our business is unprecedented and has impacted every part of our value chain, including our support services.
“We need to respond swiftly to these changes to ensure the continuity of our business through these difficult times.
“Regrettably this now includes temporary stand downs for some of our workforce based in our offices in Perth and Brisbane, as well as in other regional centres.
“The length of the stand down will initially be until the end of April, at which time we will reassess.”
Monadelphous has 6,500 employees and a total workforce of about 7,200 people across Australia.
It has taken steps to mitigate the impact of job cuts on its employees.
Affected employees will be able to draw down on their annual leave and may take this leave at half pay to extend the duration of these payments.
Employees with low leave balances at the start of the stand down will be able to access up to two weeks’ leave in advance of earning it.
The Woodside spokesperson explained that changes it was making were to comply with expert health and government guidance regarding COVID-19.
“In order to continue safe and reliable production at Karratha Gas Plant while minimising COVID-19 risks, we have informed our workforce at site of plans to reduce or defer non-essential maintenance and refurbishment works,” the spokesperson said.
“Business as usual is not an option, and we need to take extraordinary measures to protect the health and safety of our workforce.”
Woodside said it was working with contractors and suppliers to identify re-deployment and re-allocation opportunities where possible.
“In cases where a contractor employee is required to stand down before the scheduled end of their current shift, Woodside will ensure that employee is paid out to the end of their shift.”
Woodside said it acknowledged this decision would have flow-on effects into the Pilbara community, including local business sub-contractors and suppliers.
To mitigate these effects, it has expedited payments to small business suppliers and established a $3 million COVID-19 Community Fund to support local organisations in Karratha.