Page 7 - Euroil Week 13 2020
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EurOil PERFORMANCE EurOil
More European majors take the knife to capex
EUROPE
The trend continues.
THREE more European majors have reported cuts to capex in 2020 to prepare themselves for what could be a prolonged downturn.
Austria’s OMV said on March 26 it had put in place measures to safeguard its economic stability, including a €1.5bn ($1.6bn) reduction in investments. Most of this funding relates to a deal OMV had hoped to close this year to pur- chase stakes from Russia’s Gazprom in two Sibe- rian gas blocks.
The Austrian firm plans to slash organic investments by around €500mn to under €2bn in 2020, and lower costs by around €200mn com- pared with 2019. It has also postponed some of the payment for a 39% stake in petrochemicals giant Borealis but the deadline for closing the deal will be unaffected.
“These measures will safeguard OMV’s abil- ity to act in this challenging situation. Specially established task forces are monitoring develop- ments very closely in order to make any nec- essary strategic adjustments at the right time,” OMV CEO Rainer Seele said in a statement.
Italy’s Eni meanwhile announced it would trim €2bn ($2.2bn), or a quarter of its capital spending budget for this year. It also aims to cut €400mn off its operational spending in 2002, and will reduce its 2021 capex plan by €2.5-3.0bn, or around 30-35%.
“We are taking these actions in order to defend our robust balance sheet and the divi- dend while maintaining the highest standards of safety at work,” Eni CEO Claudio Descalzi said.
Eni will mainly take the knife to upstream projects, including production optimisation work and new developments that were due to start up in the near term. These activities will be restarted once market conditions improve, the company said.
Eni now anticipates producing 1.80-1.84mn barrels of oil equivalent per day (boepd) in 2020 and around the same amount in 2021. It lifted 1.87mn boepd in 2019 and had strived to achieve 3.5% average annual growth until 2025.
Lastly BP has cut its capex budget by 25% to $12bn, with its upstream business alone set to see a $1bn drop in spending. This mainly relates to “short-cycle” onshore activity, the deferral of exploration and appraisal activity and the opti- misation of major project spending. It will also remove $1bn from its downstream spending plan.
In a statement on April 1, the UK major insisted that no workers would be laid off for at least three months. But its output will be 70,000 boepd lower in 2020 as a result of the cuts. This drop relates to its US onshore oil and gas business BPXEnergy.
Week 13 02•April•2020 w w w . N E W S B A S E . c o m P7
