PARIS (AFP) – The chief executive of Total said Friday the French oil company would slash spending on exploration by 30 per cent this year due to the drop in the price of oil.
Patrick Pouyanne told the daily Le Monde that “these past two years, exploration spending was 2.8 billion” dollars at the company.
He confirmed earlier announced plans by the company to reduce investment spending from last year’s figure of $26 billion by $2 to $3 billion this year.
Pouyanne said Total would like to increase the cuts in operations by $400 million to bring the amount to $1.2 billion.
“A part of the savings will also come from the renegotiation of contracts with our suppliers as when oil falls, the prices of services and equipment falls,” he told Le Monde.
Total, which continues to lose money with its refining operations, plans to restructure its French sites and announcements will be made in the coming months, said Pouyanne.
But no site will be shuttered and “all Total employees will remain Total employees”, he added.
A global supply glut, boosted largely by robust US shale oil production, has led to the price of crude oil losing more than half of its value since June when it was trading at more than $100 a barrel.
With no quick rebound expected as OPEC producers have refused to cut output, oil companies have begun to cancel projects that are no longer profitable.