Energy manufacturing and logistics company Phillips 66 says it will slash more than US$3 billion from its budget and suspend a number of projects in response to low oil prices.
The company announced it is reducing this year’s consolidated capital spending by $700 million, removing $500 million from its operating and administration costs while also suspending its stock repurchase programme.
Phillips 66 says it will be stopping work on its Red Oak Pipeline and Sweeny Frac 4 projects, as well as its Partners’ Liberty Pipeline.
The Sweeny Refinery, located southwest of Houston, will suspend its development of a new natural gas liquids processing facility. The Red Oak Pipeline, which consists of a construction project to transport oil from storage terminals in Cushing, Oklahoma and the Permian Basin of West Texas to numerous locations along the Gulf Coast, will also be put on hold.
Aside from scaling down its operations, the company says it is remaining optimistic about the future.
Greg Garland, chairman and CEO of Phillips 66, says: ‘We are taking action to maintain our financial strength to ensure security of our dividend, execute capital growth projects that are near completion, and maintain our strong investment grade credit rating.’
Phillips 66 is not alone in making the cuts, with other energy majors including Chevron, Shell and Total announcing they are slashing their budgets in order to deal with a rapid drop in oil prices.