BP set out actions it is taking in response to the COVID-19 pandemic and ongoing market disruption that will see the oil Major reduce CAPEX and bring forward cost cutting plans.
Chief executive Bernard Looney said: "At BP we are mobilising in our own way across the BP world, taking action with three clear objectives: protecting our people; supporting the communities where we live and work; and strengthening our finances."
BP stated that job security is a big worry at this time.
"So we have taken the decision that for the next three months no BP employees will be laid off as a result of virus-related cost cutting. We simply do not want to add another burden during what is already an incredibly stressful time for individuals and families," said Looney.
Looney then touched on strengthening BP's finances.
"We are in action to protect the financial health of BP. This may be the most brutal environment for oil and gas businesses in decades, but I am confident that we will come through it – we know what to do and we have done so before. And we also entered this environment in great shape with good operating momentum and financial discipline, strong liquidity and extensive optionality in our portfolio. We remain committed to growing sustainable free cash flow and distributions to our shareholders over the long term."
BP will cut its capital expenditure.
"We now expect 2020 organic capital spend to be around $12 billion, around 25 per cent below our prior full-year guidance. In Upstream, this includes a reduction of around $1 billion in spend on short-cycle onshore activity, including in BPX Energy, as well as deferral of certain exploration and appraisal activity and optimisation of our major project spend. In Downstream, we expect a reduction in spend of around $1 billion, which includes reduced spending across our fuels marketing, refining and petrochemicals businesses."
BP said that the expected impact of these capex interventions on 2020 underlying Upstream production includes a current reduction of around 70 thousand barrels equivalent per day (mboed) attributable to BPX Energy. Looking ahead, full year 2020 underlying Upstream production is expected to be lower than in 2019.
Looney added: "We expect to achieve around $2.5 billion of cash cost savings by the end of 2021, compared with 2019, with digitisation and increased integration across the group as key drivers of this next phase of cost efficiencies."
He ended: "I am just as confident that the world will emerge stronger as well. As hard as that may seem today, we will get through this and learn important lessons in the process. We are seeing the best of people. We are coming together as a global community. We can come out of this crisis closer, more collaborative, and more caring, with all the benefits that brings for society and the planet.”