French energy group Total announced Wednesday that is was slashing capital spending, delaying the start date of several projects and upping its cost-cutting targets in a response to dramatically lower global oil prices.
In the group's Strategy and Outlook presentation Wednesday, Total's Chief Executive Patrick Pouyanne told investors that the group was reducing the amount it spends on oil and gas projects from a peak of $28 billion in 2013 to $23-24 billion this year and further to $20-21 billion in 2016.
The group saw a "sustainable level" of capex of $17-19 billion from 2017 onwards, according to the presentation.
Total was one of the first oil majors to announce a sharp cost-cutting regime in 2014, reacting quicker than others to the sharp decline in global oil prices on the back of a glut in supply and lack of demand. From a peak price of $114 a barrel in June 2014, now, a barrel of benchmark Brent crude costs $49.66.
In February 2015, Total said it wanted to achieve $1.2 billion savings in 2015 and said that by the end of the first half of the year, it had reached 66 percent of the annual target.
The group's Chief Financial Officer Patrick de la Chevardiere said on Wednesday that the group wants to bring costs down so that it can break even at $45 a barrel by 2019, Reuters reported, compared with between $70 and $80 today and a break-even price of $110 back in 2013.
"We are preparing the group for a low oil price for a long time," he told reporters.
To achieve those targets, the group said it was "further increasing its Opex (operational expense) reduction target by 50 percent from $2 billion to $3 billion by 2017."