MOSCOW (MRC) -- Total, the French oil and gas giant, plans to reduce group-wide capital spending by 10% this year and speed up billions of dollars in asset disposals, under an accelerated cost-cutting plan led by new chief executive Patrick Pouyanne, reported The Financial Times.
The move comes as thousands more job cuts were announced in the energy industry on Tuesday, with Baker Hughes, the oilfield services provider being acquired by Halliburton in a USD26.8bn deal, saying that it would lay off 7,000 employees.
Global crude prices have tumbled nearly 60 per cent since June to trade at less than USD49 a barrel, as a result of weaker growth in demand for oil, booming US shale production and Opec’s decision in November not to cut output.
In a Financial Times interview, Mr Pouyanne - appointed to the top role at Total after the death last year of Christophe de Margerie in a Moscow plane crash - said the majors, the world’s biggest energy companies, could emerge as "the winners" from the market turmoil because they have greater flexibility to respond by using strong balance sheets to borrow more while interest rates were at historic lows.
Total, he said, would first make deeper and swifter cuts to this year’s spending. These would include cuts to exploration and development in the UK region of the North Sea, Canada’s oil sands and mature fields in west African states such as Gabon and Congo.
The group is also looking at imposing a group-wide hiring freeze for 2015. Capital spending is now expected to fall USD2bn-USD3bn from last year’s total of USD26bn.
Patrick Pouyanne looks to offload some projects but stresses 'nobody will be fired'.
Mr Pouyanne said Total would press ahead with a restructuring of lossmaking refineries in Europe. "We have some assets on which we may need to make some efforts," he said. "We have three assets, one of them being in the UK, but we have some in France."
Regarding France, a restructuring plan will be presented in the spring, but Mr Pouyanne confirmed that it "will include capacity reductions" at refineries.
"When you have a plant losing more than EUR100m a year, it’s not sustainable. And it is my duty to find solutions. We are losing money and it doesn’t work."
As MRC wrote previously, in late December 2014, Total Petrochemical permanently shut down production of high density polyethylene (HDPE) with a capacity of 70,000 tonnes in Antwerp, Belgium.
Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
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