LONDON-French oil major Total SA is planning a new round of cost cuts and further reductions in capital spending to shore up profitability and protect its dividend in the face of lower crude prices.
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Earlier this year, a half dozen of Europe’s leading oil and gas companies, including BP, Eni SpA, Shell, Statoil, Total and the BG Group, sent a joint letter to the top climate change official at the United Nations that urged him to put a price on carbon emissions at an global climate summit scheduled to take place in Paris in December.
It also maintained its target of selling off $10 billion of assets in the coming two years.
It also raised the target of operating expenses reductions to US$3bil by 2017, from the previous target of US$2bil.
“Total is executing its plan to reduce capital expenditures to $23 billion – $24 billion in 2015, from the peak of $28 billion in 2013”, the company said in a statement.
In July, Total attributed cost-cutting to only modest declines in profits, which were down 4 percent to $2.97 billion in the second quarter.
Total expects to produce 2.6 million barrels of oil equivalent per day, compared with a previous forecast of 2.8 million barrels per day, the company said yesterday before holding an investors’ conference in London.
Total SA is aiming to use the cash from its production and capital expenditure cut to finance its shareholder dividend payouts in 2017.
According to the company, that would delay three projects in Norway, Australia and Italy.
The French company said in a presentation to investors it wanted to “take advantage of fast growing renewable market” to build a profitable business.
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Investments next year will be down to around $20 billion next year before returning to what the company said would be a sustainable level of around $18 billion from 2017 onward. The company’s chief executive has also made it clear that in future, investments would be directed to the refining sector, which is booming because of low cost of crude oil.
