Two of the largest companies in the oil and gas sector have announced 12,500 job losses in an effort to deal with permanently lower oil prices.
Oil is currently around $53 a barrel, less than half of its cost a year ago.
Shell is to axe 6,500 jobs and will step up spending cuts as a result of the continued low oil prices, which it said led to a 37% drop in its second quarter 2015 earnings.
The company bought BG Group, the UK's third largest energy company, for £47bn in April.
Centrica, the owner of British Gas, is to cut 6,000 jobs by 2020. The company expects to make around 3,000 redundancies by 2018 and the rest to be lost through natural attrition.
Centrica plans to make £750 million of annual cost savings by 2020 and dispose of up to £1 billion of its oil and wind assets.
Ian Conn, chief executive of Centrica, said: “Centrica is an energy and services company. Serving our customers is what we are known for, what we are good at and where we already have distinctive positions and capabilities.”
“With Centrica delivering solid financial and operational performance in the first half of the year, and making good progress in strengthening its balance sheet and reducing net debt, the Group is well placed to compete materially against the emerging long-term trends in global energy markets.”
Shell said it expects to reduce 6,500 staff and direct contractor reductions in 2015 from a total of nearly 94,000 employees. Second quarter 2015 earnings were $3.8 billion compared with $6.1 billion for the second quarter 2014, a decrease of 37%.
Ben van Beurden, chief executive of Shell, said: “Today’s oil price downturn could last for several years, and Shell’s planning assumptions reflect today’s market realities. The company has to be resilient in today’s oil price environment.
“These are challenging times for the industry, and we are responding with urgency and determination, but also with a great sense of excitement for the future.”
The news of the job losses came as the trade association for the sector published the results of a survey that suggested that an improving outlook for oil and gas companies.
Oil and Gas UK's Business Sentiment index found that companies were less pessimistic during the second quarter of 2015.
Survey respondents said that their were signs of stability in the market, with 20% reporting higher activity levels than the previous quarter, reflecting the start of annual summer maintenance programmes in the North Sea.
However, this could reflect a seasonal change, as annual summer maintenance programmes traditionally promote an increase in activity in the North Sea, the report says.
The survey also reveals that a large number of companies remained apprehensive over future activity levels, job losses and their costs during the same period.
The survey found that in a bid to cut costs, companies are reducing travel, sourcing from different suppliers, deferring Capex spending, introducing pay freezes and reducing contractor rates.
Oonagh Werngren, operations director for Oil and Gas UK, said: “While the overall index remains in negative territory for the fourth quarter in a row, this slight improvement in mood is the first upward movement we have seen since 2013.
“A number of companies have already put significant effort into tackling cost and improving efficiency and are beginning to see the impact of these efforts.”