Saudi Aramco is cutting planned spending this year, in the first sign that the oil-price war the kingdom unleashed is hitting home.
Capital expenditure will be between $25 billion and $30 billion in 2020 and the spending plans for next year and beyond are being reviewed, Aramco said. The oil giant is lowering that range from the planned $35 billion to $40 billion announced in its IPO prospectus and compared with $32.8 billion in 2019.
“We have already taken steps to rationalize our planned 2020 capital spending,” chief executive officer Amin Nasser said. Given the impact of the coronavirus pandemic on economic growth and demand, Aramco is adopting “a flexible approach to capital allocation,” he said.
The oil-price war led by Saudi Arabia and Russia threatens more pain for the company as producing nations prepare to boost supply. Discounted pricing to markets already reeling from weak demand and crude that lost roughly half its value since the beginning of the year threaten a further hit to revenue.