Lagos — Oil and gas companies are beginning to slash budgets in the wake of the crash in oil prices in the international market.
Oil prices have been adversely affected by the spread of the coronavirus, and failure of OPEC+ to sustain the output cuts deal to boost prices.
Brent slide to $29.79 per barrel around 11:00 AM Nigerian time on Tuesday.
BP said it planned to reduce capital and operational spending. Although its 2019 capital spending reached around $15 billion, the firm has not disclosed what it would drop to this year.
Chevron Corp said it was looking at ways to trim spending that could lead to lower near-term oil production.
North America oil and gas producers have slashed their capital spending by about 30% on average, according to data compiled by Reuters.
Exxon Mobil said it would make “significant” cuts to spending this year. The company earlier budgeted $30-33 billion for projects this year.
Gulf Keystone has also suspended some of its drilling activities in the northern Iraqi region.
Kosmos Energy said it would keep production low and reduce its 2020 capital budget by around 30% to $250 million.
Santos Ltd, independent gas producer, said it is reviewing all its capital spending plans in light of the collapse in oil prices and would stop all forms of employment.
Saudi Arabia’s national oil company Aramco said it planned to cut capital spending for 2020 to between $25 billion and $30 billion, compared with $32.8 billion in 2019.
While Nigeria’s NNPC made some re-shuffling of its officials last week, it is yet to announce any cut in spending, likewise other local oil and gas firms.
However, the country’s Minister of Finance, Budget and National Planning, Zainab Ahmed on Monday, said the federal government has suspended its $22.7 billion external borrowing plan.
The minister who spoke at the 2020 International Conference on the Nigerian Commodities Market organized by the Securities and Exchange Commission, SEC in Abuja, said the decision to jettison the plan was taken “due to current realities in the global economic landscape.