Chevron Corp said it is to cut spending on exploration, drilling and other projects by about 24 percent next year to US$26.6 billion in response to slumping energy markets.
Chevron, the second-largest US oil producer, said it is focusing on investments that will deliver the highest profits in the near-term, while holding off on more ambitious projects that take several years to begin generating cash.
About 70 percent of the spending will be for oil and natural gas developments outside the US, the San Ramon, California-based company said in a statement on Wednesday.
About 8 percent of the budget will be reserved for so-called downstream projects, which typically include refinery upgrades and expansions, the statement said.
Chevron is expected to post its lowest annual profit in more than a decade this year after a 17-month collapse in commodity markets that stripped crude of almost two-thirds of its value.
Like many of its peers in the oil industry, Chevron has trimmed jobs and canceled or postponed its riskiest projects to cope with shrinking cash flow.
The price of oil has led a painful retreat in commodities prices — including copper, iron ore and nickel — in the past 18 months, with crude slumping more than 60 percent from highs above US$100 in the summer of last year.
A number of companies have been hit by the dive, with several closing their rigs, while others have been forced to stop projects.
The latest saw miner Anglo American PLC on Tuesday reveal plans to slash its workforce by almost two-thirds after 2017, adding that it would suspend dividend payments until the end of next year.
Royal Dutch Shell PLC yesterday refused to rule out closing its New Zealand operations after more than a century as it announced a review of its operations in the nation.
Shell New Zealand chairman Rob Jager said the review was part of a move to “streamline” the London-listed company’s global portfolio.
“The Shell business in New Zealand is a great, but small, part of the global Shell business and hence the decision to undertake a strategic review at this time,” he said in a statement.
In October, Shell booked a mammoth US$7.4 billion third-quarter loss on the back of plummeting oil prices and the scrapping of expensive projects in Alaska and Canada.
As a result, it vowed to become a “more focused and competitive company,” concentrating its growth efforts on deep water and integrated gas.
Shell’s assets in New Zealand include stakes in the Maui, Kapuni and Pohokura gas fields, as well as a 50 percent share in Shell Todd Oil Services.
Jager said the company, which opened operations in New Zealand in 1911, supplied about 70 percent of the nation’s gas.
He said all options were being examined, including a full exit from New Zealand, and declined to estimate the value of the assets.
Additional reporting by AFP
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