Moscow — Russian gas producer Novatek plans to cut capital expenditure by a fifth this year, mainly for developing its oil projects after a global deal to reduce output, a company manager said on Thursday.
The economic fallout from the spread of the new coronavirus has also hit the demand and prices for commodities worldwide and forced oil and gas companies to slash investment plans.
“Considering the present macro environment we will revise our capital guidance downward and may reduce this amount by up to 20%, or 50 billion roubles ($676 million) of our planned investment programme,” Mark Gyetvay, Novatek’s Chief Financial Officer, told a conference call with the investors.
Novatek had planned capex at 250 billion roubles for 2020.
Gyetvay said that most of the cuts will be related to oil projects, while the company has maintained its investment commitment to “LNG program and key domestic-related projects”.
Novatek has also delayed the final investment decision and is considering postponing the launch of its Obsky LNG plant, Gyetvay said.
The plant is expected to produce 4.8 million tonnes of liquefied natural gas annually starting from 2022-2024.
Gyetvay said that the global crisis has not altered Novatek’s production plans for 2020, while its key asset, the Yamal LNG plant, is working above its capacity.