French oil major Total on Monday joined peers Shell and Equinor on announcing immediate action to cope in a “three-crises” environment, Kallanish Energy reports.
The company said it’s more resilient to weather the storm than it was in 2015, but an action plan is required. Thus, it will reduce its organic capex by 20% or more than $3 billion this year, with net investments now expected at less than $15 billion.
It has suspended the $2 billion buyback program planned at oil prices of $60 a barrel in 2020. The company bought back $500 million in the first two months of the year.
Additionally, it increased the target for cost savings from $300 million to $800 million. That means it’s freezing recruitments except in key domains for the future such as new energies and digital; and it’s also not replacing every retirement leaves.
In a message to staff, CEO Patrick Pouyanne said the company is facing three crises, of which “two are short-term and one is medium-to-long term.” They are: the coronavirus pandemic; the oil price; and climate change, he said.
The CEO said he had a conference call with 1,300 managers across the world to put in place the 2020 action plan, based on a $30/Bbl oil price, while asking staff to follow the guidelines to fight the Covid-19 “crisis.”
Pouyanne expects oil demand to fall by 6 million barrels per day (Mmbdp) in April. He sees an extra supply of 10 Mmbpd of crude this year, amid a “zero-demand” environment.
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