Total has announced a host of new cost cutting measures.
The confirmation follows last week’s speculation that Europe’s second-biggest oil company would have to shred its budget to counter production shortfalls.
Chief executive Christophe de Margerie presented the cost cutting programme to the financial community recently. The firm, which previously sold $15billion of assets over the last two years, announced it will sell a further $10billion of assets in the next two years.
A company statement said: “Total is continuing its transformation by focusing on strategic assets providing growth and high profitability.”
Total also revealed plans to implement a company-wide cost reduction programme. Under the bid, organic investment will be reduced from $28billion to $25billion over the next three years. A total of $2billion will also be skimmed off total operating costs each year through 2017. The firm added that it hoped the cost cutting measures would yield $15billion of free cash flow in the same year.
Total also confirmed plans to lower its forecast for growth in production. Under the new projections, output could rest at 2.3 million barrels of oil equivalent a day next year compared to the original 2.6 million barrel target.
The confirmation comes after documented project completion slips, including the Laggan-Tormore off the Shetland Islands. Production from the development, which was originally expected to flow this year, is now tipped for Q1 next year.
The Paris-based explorer’s output was also hurt by the shutdown of the Caspian Sea Kashagan project due to detected leaks. The company chief is now expected to shift the firm’s exploration strategy away from “high risk” wells in a bid to curb costs.