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fter previously taking efficiency measures to alleviate the impact of plunging oil prices, several oil and gas companies in the country may now be forced to take stiffer action: laying off workers.

Last year, oil and gas companies tried to renegotiate the value of contracts they had sealed with service companies as part of their attempts to make their activities more economical amid the declining oil price.

With the plunging oil prices showing no signs of rebounding, more oil and gas contractors in the country are considering layoffs.

Among the companies with production sharing contracts (PSC) that plan to cut back on employees is Star Energy (Kakap) Ltd. The company holds an interest in the Kakap block located in Natuna Sea.

Previously, Chevron and ConocoPhillips were reported to be reducing staff numbers.

Upstream Oil and Gas Regulatory Task Force (SKKMigas) spokesperson Elan Biantoro said the regulator continued to work with the contractors. He added that there had been no massive layoffs affecting permanent employees of oil and gas companies to date. However, there have been layoffs at service companies, such as Schlumberger, globally.

'€œSKKMigas'€™ position is that there shouldn'€™t be any layoffs; not even a single person. If it is absolutely necessary, it should be in the form of natural wastage [through retirements], no new recruitment and voluntary redundancy,'€ SKKMigas spokesperson Elan Biantoro said.

There are currently more than 50,000 people working in the oil and gas sector, according to Elan. As many as 32,000 of these are employees of oil and gas companies while the remainder are employed by service companies.

Oil and gas firms have been struggling to stay afloat as prices recently touched the lowest point for a decade because of a global glut of supply.

Benchmark West Texas Intermediate (WTI) crude was at US$30.84 per barrel on Wednesday, according to figures from Bloomberg. Another benchmark, Brent crude, was little better at $31.58 per barrel.

Many analysts are predicting that prices could fall lower and business players are currently preparing for a '€œlower for longer'€ scenario.

'€œThe situation is worse as oil prices continue plunging. At this moment we are reducing capital expenditure and squeezing operational expenditure. These will affect production, which means that in the future the present number of employees will not be efficient in the face of declining production,'€ said Star Energy'€™s Rudi Suparman.

Star Energy Kakap, which produces around 24 million standard cubic feet per day (mmscfd) of gas and around 2,000 barrels of oil per day (bopd), was planning to improve efficiency by up to 40 percent
to cope with the declining price, Rudi confirmed.

'€œIn the past, we'€™ve taken measures that didn'€™t affect human resources. At this moment, we are at the stage of negative growth. We will not seek replacements for retiring employees and we have offered to move some employees to our other business lines such as geothermal,'€ Rudi said.

The reduction in employment is expected to slightly affect the national production target. Total national oil production currently stands at 839,000 bopd, according to Elan.

Apart from the oil and gas sector, coal miners and service providers are also suffering. Jakarta Stock Exchange-listed United Tractors (UNTR) is also expecting to reduce the number of its employees as coal miners reduce production.

'€œOur mining contracting business is forecast to drop by 10 percent. For our own mining business, our internal target is to produce coal at the same level as last year at around 3 million tons. However, given that the price continues to plunge, we still don'€™t know what will happen,'€ UNTR corporate secretary Sara Loebis said.