BP says it is facing the “most brutal environment” for the industry in decades as it counts the cost of the slump in the oil price amid the coronavirus crisis.
The UK-based energy giant said it was cutting 2020 spending plans by 20% to $12bn (£9.7bn) and expects to take a $1bn (£810m) hit to first quarter profits.
Oil prices fell by 65% in the first quarter of the year as a result of a sharp drop in demand following restrictions on movement imposed to try to restrict the spread of the virus.
A price war between top oil producers Saudi Arabia and Russia further weakened the sector as the two nations increase supplies to try to win market share.
Earlier this week, the price of a barrel of Brent crude hit its lowest level since 2002.
BP’s decision to cut investment spending is in line with moves announced by rivals.
It is also looking to achieve $2.5bn (£2bn) in savings by the end of 2021 though the company has stressed that no BP employees will be laid off during the next three months as a result of virus-related cost-cutting.
Rival Royal Dutch Shell warned on Tuesday that it expects to take a hit of up to $800m dollars (£650m) in the first quarter.
The London-listed companies are staples of many UK pension funds.
BP chief executive Bernard Looney said: “This may be the most brutal environment for oil and gas businesses in decades.”
He said the company was acting “quickly and decisively” to shore up its finances.