Oil majors around the world are slashing their budgets to survive the impacts of the Coronavirus outbreak.
Oil prices have fallen over recent weeks to just US$25 a barrel, causing producers to re-evaluate their spending for 2020.
In North America alone, oil and gas companies have slashed their capital spending budgets by around 30% on average, according to data analysed by Reuters.
Oil company Eni says it will cut its investments and halt plans to re-purchase US$433.84 million of shares, while ExxonMobil also announced it would make ‘significant’ cuts to the US$30 - $33 billion budget it had set aside for this year.
Shell has already dropped its capital expenditure by US$5 billion and has suspended its share buyback plans.
Total says its main budget cuts will be in its exploration sector, where it plans to save about US$800 million in operating cost savings, an increase on the US$300 million it had previously proposed cutting.
The reduction in budgets come after oil storage tanks around the world begin to reach capacity, regardless of a significant price hike in leasing costs.
According to Reuters, Europe’s Amsterdam-Rotterdam-Antwerp refining and storage hub saw the cost of storing diesel and jet kerosene rise by between 50% and 100% over recent weeks.
While oil producers have cut down on production, a glut of oil has flooded the market because of the downturn in demand relating to the Coronavirus.
With the cancellation of the majority of flights around the world, planes aren’t needing to be refuelled which has also led to a rise in the need for jet fuel storage.
Although it is estimated there is between 0.9-1.8 billion barrels of spare tank storage capacity globally, this only amounts to between three to six months of extra storage if supply is to exceed demand by more than 10% over this period.
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