BP plans further cuts

Oil firm plans finances for oil at $60 a barrel in 2017

BP has set out further cuts to its business in response to the sustained lower price of oil.

The cuts came as the oil firm reported profits of £1.17 billion for its third quarter, compared with £0.85 billion for the previous quarter and £2 billion for the third quarter of 2014. BP said the fall in profits showed the impact of sharply lower oil and gas prices, but added that the implementation of earlier cost saving plans were beginning to show benefits.

The company plans to reduce capital expenditure to £11 – £12.4 billion by deferring projects and reductions in supplier costs. The company's capital expenditure was £15.7 – £17 billion in 2014. It will also continue divesting assets, which will return almost £6.5 billion by the end of 2015 to help manage “continuing oil price volatility”.

The planned cuts are being made with the anticipation that oil will be $60 per barrel by 2017. The current oil price is around $47, 60% less than its peak last June of $115 a barrel.

Bob Dudley, chief executive of BP, said: “BP has successfully adapted to changing circumstances many times in its history and, in a hard time for the entire industry, I believe we will once again successfully take on today’s challenges. We are already in action, with a quality portfolio and clear plans for the future, underpinned by enduring principles. I am confident BP will continue to deliver value into the years and decades ahead.”