21 January 2014, News Wires – Total is chopping its capital expenditure by 10% with the exploration budget to take an even bigger hit, according to a report.
The French supermajor is also to put two Canadian oil sands projects on the long finger, but chief executive Patrick Pouyanne said “nobody will be fired” despite the company re-adjusting to the current weak oil market, the Financial Times newspaper reported.
Oil companies and contractors are in the main unveiling much reduced capex budgets for the year, with many going for cuts of between 20% and 30%.
Pouyanne, who succeeded the late chief executive Christophe de Margerie last year, said the Paris-based giant will shed 10% from its 2014 capex budget of $26 billion, according to the report.
The exploration budget will be hit with a 30% cut to less than $2 billion, the report added.
Two Canadian oil sands projects are to be put on “a long backburner”, the report quoted Pouyanne as saying, without identifying the projects. Total has stakes in a number of oil sands projects, and is partnered in some by Canadian oil sands giant Suncor.
Proposals to dispose of $10 billion in assets are to be speeded up and Total will push for a bigger cut in operational spending – from a drop of $800 million to $1.2 billion – the report added.
No refineries are to be closed, but some European facilities are braced for weak margins.
“We are all rediscovering that oil is a volatile commodity,” Pouyanne told the newspaper.
“We have to react, but not overreact. A major company like Total has always been successful when we manage to maintain our base strategy for these types of low prices . . . The best way to face this volatility is to have the company strong enough to lower your cash break-even.”