Royal Dutch Shell and BP have separately announced substantial cuts in capital expenditure (capex) in response to falling oil prices. Most of the cuts will be in the companies’ exploration and production activities.
Shell says that it is curtailing group-wide investment by $15.0 billion over the next three years because of lower oil prices. Organic investment is expected to be lower in 2015 than last year. Shell says it is deferring spending in many areas, “exiting selective growth positions, and driving costs down in the supply chain.” BP has announced that it will cut groupwide capex by $4.0-6.0 billion this year on lower crude prices. Capex will be about $20.0 billion in 2015, significantly lower than previous guidance of $24.0-26.0 billion.
