French energy group Total announced plans on Monday to step up cost cuts and suspend its share buyback programme in order to deal with a slump in oil prices and the economic fallout from the coronavirus outbreak.
Total CEO Patrick Pouyanne said that with prices of $30 per barrel, Total would now target organic capital expenditure cuts of more than $3 billion.
In a video message to the company's staff last Thursday, Pouyanne said the group was facing three crisis - the corornavirus outbreak, the crash in oil prices due to a sharp fall in global oil demand just as supply is expected to rise, and the climate change crisis.
"In the face of this crisis, we need to react...," Pouyanne said. "We have a $9 billion hole and we want to plug it. To reduce it, we will act with the various levers that we have."
Pouyanne said that out of the $3.3 billion in cost savings, $2.5 billion will come from exploration and production, $300 million from gas, renewables and power, $300 million from refining and chemicals, and $200 million from the marketing and services division.
The company will also target $800 million in 2020 operating cost savings compared to 2019, instead of the $300 million previously announced, and suspend its share buyback programme.
Total had planned $2 billion of share buybacks this year and Pouyanne said it had carried out $500 million so far.
"So we are saving $1.5 billion on our plan," he said.
He added that recruitment would not be completely frozen, but reduced substantially.
"The markets are currently moving a lot, but our liquidity, our cash flow is high: we have more than $10 billion. We can deal with this financial crisis," Pouyanne said.
(Reporting by Bate Felix and Sudip Kar-Gupta; editing by Jason Neely, Kirsten Donovan)