Arab News, Thursday, Mar 26, 2020 | Shaaban 2, 1441
Kuwait’s KPC to cut spending on ‘unprecedented’ oil price slide
Kuwait: State-run Kuwait
Petroleum Corp. has instructed all subsidiaries to cut capital and operating
spending this year due to an “unprecedented” decline in oil prices caused by the
collapse of a global oil supply cut pact and the spread of the coronavirus which
has hit demand, according to an internal memo seen by Reuters.
The memo, which was sent by KPC’s chief
executive Hashem Hashem and dated March 18, said that all sectors in KPC and
other subsidiaries must “rationalize spending and review their priorities in a
way that does not impact the safety and continuity of operations.”
“This includes the plans and programs to increase
profitability through boosting revenue, reducing operating costs... and
reviewing required capital spending through canceling or postponing or cutting
cost for programs and projects,” Hashem added in the memo.
KPC joins a number of other energy companies
around the world who are slashing spending after the benchmark Brent oil price
more than halved since the start of the year, to trade around $26 a barrel on
A global pact on cutting supplies between the
Organization of the Petroleum Exporting Countries, Russia and other producers, a
group known as OPEC+, collapsed this month.
All production limits were scrapped after Moscow
rejected OPEC’s call for deeper production curbs, prompting Saudi Arabia, the
world’s top oil exporter, and the United Arab Emirates to say they would both
ramp up output to record levels.
Abu Dhabi National Oil Company (ADNOC) has
notified contractors and suppliers that it will review existing deals to find
ways to cut costs due to the steep slide in oil prices, according to three
industry sources and a letter seen by Reuters.
Saudi Arabia’s national oil company Saudi Aramco,
the world’s top oil producing firm, said this month it planned to cut capital
spending for 2020 to between $25 billion and $30 billion, compared with $32.8
billion in 2019.