US oil giant Chevron will increase asset sales by 50% to nearly £10billion and curtail new investment for the next two years after plunging oil prices squeezed cash flow.
The North Sea operator’s divestment of oil and natural gas fields and other exploration and production assets will continue through 2017, chairman and chief executive John Watson said today.
Capital spending will decline through the period as construction of mega-projects, such as the £36billion Gorgon gas-export development in Australia winds down, he said.
In January, Chevron reduced its spending plan for 2015 by 13% to £23.2billion.
Even with the cut, Mr Watson today reaffirmed plans to raise production 20% to the equivalent of 3.1million barrels of crude a day by the end of 2017.
The adjustments are necessary to address “near-term market conditions,” he said.
Oil has lost almost half its value since late June amid weakening international demand growth and rising supplies from US shale formations.
Tens of thousands of jobs have been cut across the industry globally as companies curb spending.
Chevron is seeing cost cuts among equipment and oilfield-service vendors of 10% to 40%, according to Jay Johnson, the firm’s senior vice president of upstream.
The company made 35 oil and gas discoveries and added the equivalent of 1.4billion barrels of oil to its portfolio last year.
The finds included deepwater assets in the US Gulf of Mexico and off the west coast of Africa, as well as North American shale fields.
Chevron vice-chairman George Kirkland called 2014 “an excellent year for our exploration programme around the world.”
Start-ups from the Clair Ridge offshore development in the UK and Sonam project in Angola will be delayed by a year to 2017, Chevron said.
The company is an investor in the BP-operated Clair Ridge development and operates Sonam.
After 2017, Chevron’s annual production growth probably will slow to 1%, Mr Johnson said during his presentation to analysts in New York.
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