BP said it is acting quickly to strengthen its finances amid the “most brutal environment for oil and gas businesses in decades” after prices plummeted in the face of coronavirus.
The oil giant said it will reduce its capital spending plans by 25% – with a new forecast of 12 billion US dollars (£9.7 billion) – as part of cost reductions.
However, it stressed that no BP employees will be laid off during the next three months as a result of virus-related cost-cutting.
The company added that it will reduce output from its US shale oil and gas business, with plans to cut investment in its shale arm by 1 billion dollars (£810 million).
Today we have released a COVID-19 response and market update. It details how we are:— bp (@bp_plc) April 1, 2020
â¢ Protecting the physical and mental health of our people
â¢ Supporting the communities where we live and work
â¢ Strengthening our finances to better weather market volatility
Rival Royal Dutch Shell warned on Tuesday that it expects to take a hit of up to 800 million US dollars (£649 million) in the first quarter.
The price of oil has crashed in recent weeks due to the Covid-19 pandemic and a price war between Russia and Saudi Arabia, with Brent crude falling to an 18-year low on Monday.
BP said it expects to achieve 2.5 billion dollars (£2 billion) in cost savings by the end of 2021 as it looks to mitigate the impact of lower prices.
Chief executive Bernard Looney said: “We are now acting quickly and decisively to further strengthen our financial frame in response to the currently volatile and extremely challenging market conditions.
“I have been incredibly inspired by the response of colleagues globally to the coronavirus situation.
“They are taking care of each other, supporting their communities, and identifying new ways to safely drive down costs and strengthen our finances. I truly believe that our purpose is driving our actions during this crisis.
“That is why I am confident we will weather this storm and emerge better able to deliver our ambition – to make BP a net-zero company by 2050 or sooner and help the world achieve the same goal.”