Woodside has announced a reduction of nearly 50% in its 2020 total expenditure to about AUD2.4bn ($1.46bn) owing to the disruptions caused by COVID-19 and declining prices of oil and liquefied natural gas (LNG).

The Australian natural gas producer has also deferred its final investment decisions (FIDs) for the Scarborough, Pluto Train 2 and Browse LNG projects.

The company said that its decisions are based on the prevailing uncertain global investment environment resulting from the COVID-19 outbreak. The Australian energy firm also said that it needed to take a decisive and swift action due to the oversupply of crude oil and LNG, which it says has resulted in considerable drop in prices.

Woodside’s revised total expenditure for 2020 includes nearly AUD100m ($60.66m) reduction in its operating expenditure and about 60% cost cutting in investment expenditure to AUD1.7-1.9bn ($1-1.15bn).

The company’s 2020 production guidance will remain unchanged at 97-103 million barrels of oil equivalent (MMboe).

The natural gas company said that its priority is to safeguard the health and safety of its employees, contractors, and communities, while ensuring the operational and financial integrity of its business.

Woodside said that the major turnaround for LNG Train 3 at the Karratha Gas Plant (KGP) has been deferred to September 2020, and for LNG Train 4 has been postponed to August 2021.

The company will defer most of its proposed exploration operations although it will continue with certain seismic acquisitions. These measures are expected to reduce its exploration expenditure by 50% to AUD75m ($45.49m).

Woodside’s target FID for the Scarborough project and Pluto Train 2 have been deferred to 2021 while it has not revealed any target date for the Browse LNG project.

Woodside CEO comments on the revised business strategy amid COVID-19 crisis

Woodside CEO Peter Coleman said: “Our disciplined approach to cash flow and debt management has positioned us to respond quickly and decisively. The measures we are implementing will preserve cash during these challenging months and ensure that in the longer term we can successfully execute the growth strategy we have in place.

“The development of the Scarborough and Browse gas resources through Woodside’s proposed Burrup Hub remains among the world’s most cost-competitive LNG investment opportunities and one which will provide significant economic returns to shareholders, governments and communities for decades to come.”