SAN RAMON, Calif., Dec. 10 (UPI) -- U.S. supermajor Chevron Corp. said it was cutting its budget for next year by nearly a quarter as it focuses on options it considers reliable in the downturn.
The company, which has headquarters in California, said it plans to spend about $26.6 billion next year, about a quarter less than total expected investments for 2015.
"Our capital budget will enable us to complete and ramp-up projects under construction, fund high return, short-cycle investments, preserve options for viable long-cycle projects, and ensure safe, reliable operations," Chairman and Chief Executive Officer John Watson said in a statement.
Chevron in July announced plans to lay off roughly 2 percent of its global workforce, with most of the cuts coming from its offices in Texas and California.
Chevron is following its peer companies in enacting staff reductions in order to preserve capital in an era of sustained declines in crude oil prices. A surplus in supplies in a global economy still working to recover from the last fiscal crisis has pushed crude oil prices down by around 40 percent from last year's levels.
Energy companies are scaling back on major projects and spending in the exploration and production, or upstream, part of the industry. About $9 billion, or around 30 percent of the 2016 spending for Chevron, will target upstream operations, including shale reserves in North America. Around $11 billion will fund projects already in development, with only $3 billion going toward projects yet to be sanctioned.
"We gain significant flexibility in our capital program as we complete projects under construction," Watson said. "Given the near-term price outlook, we are exercising discretion in pacing projects that have not reached final investment decision."
Crude oil prices are around $40 per barrel. The World Bank last week said oil prices could recover to only $60 per barrel by 2019.