Oil majors slash 2020 spending 18% after prices slump

LONDON (Reuters) – The world’s biggest oil and gas companies are slashing spending this year following a collapse in oil prices driven by a slump in demand because of coronavirus and a price war between the top exporters Saudi Arabia and Russia.

Cuts already announced by five major oil companies including Saudi Aramco (2222.SE) and Royal Dutch Shell (RDSa.L) come to a combined $19 billion, or a drop of 18% from their initial spending plans of $106 billion.

Norway’s Equinor (EQNR.OL) said on Wednesday it would cut capital expenditure, or capex, by some $2 billion while Chevron (CVX.N) said on Tuesday it would slash its capex this year by $4 billion.

Others such as U.S. giant Exxon Mobil Corp (XOM.N) and Britain’s BP (BP.L) have said they will cut capital expenditure but haven’t given specific figures as yet.

(GRAPHIC: Big Oil’s 2020 capex cuts, here)

Oil prices have slumped 60% since January to below $30 a barrel. Brent crude LCOc1 was or 1.7% at $26.70 per barrel on Wednesday as faltering fuel demand outweighed a massive pending U.S. economic stimulus package.

Investors also say that if the current crisis is prolonged, the spending cuts announced by major oil companies may not be enough to let them maintain dividends without adding to their already elevated levels of debt.

The combined debt of Chevron, Total (TOTF.PA), BP, Exxon Mobil and Royal Dutch Shell stood at $231 billion at the end of in 2019, just shy of the $235 billion hit in 2016 when oil prices also tumbled below $30 a barrel.

(Graphic: Big Oil’s rising debt png, here)

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