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ConocoPhillips cuts production, buybacks, spending again

April 20/2020

MOSCOW (MRC) -- ConocoPhillips said it would cut gross production by 225,000 barrels of oil per day while also suspending its share repurchase program and cutting back further on capital spending to weather the collapse in oil prices, said Hydrocarbonprocessing.

Oil and gas producers have sunk deep into crisis mode over the past month as the slump in demand caused by coronavirus lockdowns left the worlds big producers producing far more than current needs and crude prices falling below USD30.

ConocoPhillips said it was currently cutting back production at its Surmont oil sands facility in Canada by about 100,000 barrels of oil per day (bpd) due to low prices for Canadian crude. The independent producer also plans to begin reducing production across the lower 48 U.S. states from May, with an initial cutback of 125,000 bpd.

North American oil producers have so far announced cuts of more than 550,000 oil equivalent barrels per day (boepd) for the year, data compiled by Reuters showed, with more expected to come in quarterly earnings reports over the next few weeks.

The U.S. Energy Information Administration expects U.S. crude oil production to fall about 500,000 bpd this year to an average 11.8 million bpd in 2020. ConocoPhillips also said it would cut its operating capital expenditures by an additional USD1.6 billion to USD4.3 billion. This comes on top of a USD700 million reduction announced last month and brings the total cut to about 35% from its original guidance of USD6.6 billion.

U.S. and Canadian producers, generally burdened with higher costs than some of their global competitors, have already slashed spending by more than USD37 billion, or around 30%.

ConocoPhillips said the roll back in spending would be primarily focused on North America. The company, which last month halved USDts USD3 billion a year share buyback program, said it would suspend repurchases and cut operating costs to save USD5 billion in cash.

As MRC informed earlier, ConocoPhillips has seized products belonging to Venezuelan state oil company PDVSA from the Isla refinery it runs on Curacao. Conoco has won court orders allowing it to seize PDVSA assets on Caribbean islands, including Curacao, in efforts to collect on a USD2 billion arbitral award linked to the 2007 nationalization of Conoco assets under late leader Hugo Chavez.

According to MRC's ScanPlast report, estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, ConocoPhillips.
Category:General News
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