Total will cut spending on ageing North Sea fields and cut US shale production after the recent plunge in oil prices, CEO Patrick Pouyanne says.
DAVOS, Switzerland, Jan 21 (Reuters) – French oil and gas company Total will cut spending on ageing North Sea fields and on U.S. shale production after the recent plunge in oil prices, its chief executive said on Wednesday.
Speaking at a panel session at the World Economic Forum in Davos, Switzerland, Patrick Pouyanne said he expected oil prices to remain low in the first half of 2015 after falling almost 60 percent since June to below $50 a barrel.
Pouyanne told the Financial Times on Tuesday that Total planned to reduce capital spending by 10 percent this year from 2014's $26 billion and was also looking at imposing a hiring freeze for 2015.
Total's spending in the North Sea, home to the benchmark Brent crude oil, will be reduced as profitability from fields there has worsened, Pouyanne said on Wednesday.
A Total spokeswoman later said that the group's UK unit will reduce contractor costs by 10 percent in 2015 and this will translate into an unspecified cut in contracted staff in the region.
U.S. shale oil and gas production, which has surged in recent years, causing a large build in global oil supplies, will also be curtailed.
"We have fields on the U.S. East Coast and my instructions have been pretty clear -- we will limit investments," Pouyanne told the panel. "I can come back in one year when prices come back."
While many shale fields were profitable at oil prices of $70 a barrel, current low prices could lead to efficiencies that will reduce production costs below $50 per barrel, he added.
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