LONDON: The world's biggest oil and gas companies are slashing spending this year following a collapse in oil prices driven by a slump in demand because of coronavirus and a price war between the top exporters Saudi Arabia and Russia.
Cuts already announced by five major oil companies including Saudi Aramco and Royal Dutch Shell come to a combined US$19 billion, or a drop of 18per cent from their initial spending plans of US$106 billion.
Norway's Equinor said on Wednesday it would cut capital expenditure, or capex, by some US$2 billion while Chevron said on Tuesday it would slash its capex this year by US$4 billion.
Others such as U.S. giant Exxon Mobil Corp and Britain's BP have said they will cut capital expenditure but haven't given specific figures as yet.
(GRAPHIC: Big Oil's 2020 capex cuts, https://fingfx.thomsonreuters.com/gfx/editorcharts/GLOBAL-OIL-CAPEX/0H001R8JFCHE/eikon.png)
Oil prices have slumped 60per cent since January to below US$30 a barrel. Brent crude was or 1.7per cent at US$26.70 per barrel on Wednesday as faltering fuel demand outweighed a massive pending U.S. economic stimulus package.
Investors also say that if the current crisis is prolonged, the spending cuts announced by major oil companies may not be enough to let them maintain dividends without adding to their already elevated levels of debt.
The combined debt of Chevron, Total , BP, Exxon Mobil and Royal Dutch Shell stood at US$231 billion at the end of in 2019, just shy of the US$235 billion hit in 2016 when oil prices also tumbled below US$30 a barrel.
(Graphic: Big Oil's rising debt png, https://fingfx.thomsonreuters.com/gfx/editorcharts/GLOBAL-OIL-MAJORS/0H001R8HMCF5/eikon.png)
(Reporting by Ron Bousso; Editing by David Clarke)