Origin Energy will cut 650 jobs from its Queensland-based gas operations in a bid to drive down costs and stay globally competitive.
While Origin's gas production is centred on the $25 billion APLNG export terminal at Gladstone, the bulk of the jobs will be lost in support positions in the Brisbane office.
Overall more than a third of the 1,600 gas-related workforce will no longer have a job at Origin, with the bulk of the retrenchments occurring in the next three months.
While the desire to cuts costs was well telegraphed at Origin's full-year results in August, the size of the cuts was not.
"The loss of jobs is never a decision taken lightly and we are putting considerable effort into completing this process as quickly as we can so we can provide certainty to our people," Origin chief executive Frank Calabria said.
"We firmly believe these changes are both necessary and sustainable, in the best interests of Origin and our project partners, and put us in a strong position to achieve our objective of becoming a globally competitive, low cost gas producer."
The cuts are part of a broader restructuring plan to cut operating and capital costs by $500 million a year over the next 18 months.
On Origin's numbers that would drive down APLNG's operating breakeven point from $US30 a barrel of oil equivalent (boe) to $US24/boe.
The breakeven cost of distribution would fall from $US48/boe to $US40/boe.
Twelve months ago, faced with an oil glut and persistently low prices mired below $US50 a barrel, Origin wrote down the value of its 37.5 per cent stake in the APLNG joint venture by more than $1 billion as part of a broader $1.9 billion impairment charge.
It prompted a major rethink at Origin, including a decision to bundle up its conventional oil and gas assets for sale.
The $1.85 billion sale of the assets to Beach Energy is expected to be completed this week.
