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    BP Shaves 25% off 2020 Capex

Summary

The cutbacks will affect production this year.

by: Joseph Murphy

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BP Shaves 25% off 2020 Capex

BP has slashed its capital expenditure plan for 2020 by 25% to $12bn in response to the Covid-19 pandemic and the market downturn, it announced in a statement on April 1.

The major's upstream operations will see a $1bn reduction in spending relating to "short-cycle" onshore activity, as well as the deferral of exploration and appraisal activity and "optimisation of major project spend." An identical cut will be made to its downstream business across its fuel marketing, refining and petrochemicals operations.

No workers will be laid off for the next three months, BP said.

Production in 2020 will be 70,000 boe/d lower because of the cutbacks, relating to the company's US onshore oil and gas business BPX Energy.

BP said it had $32bn in cash and undrawn credit facilities at the end of March to help weather the downturn. The company is monitoring the impact on Covid-19 but expects "no significant operational impact" on its first-quarter results. The second quarter may be different, however.

The company's downstream segment will be affected by the "significant and growing decline" in fuel demand, it warned.