Published By : 24 Sep 2015 | Published By : QYRESEARCH
French energy company Total announced on Wednesday that it was cutting on its capital spending and delaying the conception of many projects and increasing its cost cutting targets to respond properly to the dramatically low oil prices across the globe in current scenario.
In a recent Strategy and Outlook meeting held on Wednesday, the Chief Executive of the company, Patrick Pouyanne had told investigators that the group has decided to reduce the amount of resources it will be spending on oil and gas projects in the year 2016. From US$28 billion in the year 2013 to US$23-24 billion this year, the company has decided reduce the spending to US$20-21 billion in 2016.
It was also stated in the presentation that the group sees a capex of US$17-19 billion in the years ahead of 2017.
Total group was the first major oil company across the globe to have announced a strict cost cutting plan in the year 2014, much before other companies responded to the sharp decline in prices of oil on a global level owing to the glut in supply and low demand. From a peak of US$114 per barrel in June of 2014, the prices of benchmark Brent crude have gone down to US$49.66 per barrel.
In February this year, Total had said that it was planning to achieve savings worth US$1.2 billion over the year and that by the end of the first half of this year, 66 per cent target was reached. The Chief Financial Officer of the company Patrick de la Chevardiere stated during Wednesday’s presentation that the group wanted to bring down costs so that it can survive at the price of even US$45 per barrel by the year 2019.
He told that the current move in reducing spending is a way to prepare the group for a long time in the future. For achieving these targets, the company said that it will further increase its operational expense reduction target by 50 per cent from US$2 billion to US$3 billion by the year 2017