Total cuts North Sea, US Shale spending after oil price plunge

French oil and gas company Total will cut spending on ageing North Sea fields and on US shale production after the recent plunge in oil prices, Patrick Pouyanne, Total chief executive said at a panel session at the World Economic Forum in Davos, Switzerland.

Pouyanne said he expected oil prices to remain low in the first half of 2015 after falling almost 60 percent since June to below $50 a barrel.

Total plan to reduce capital spending by 10 percent this year from 2014’s $26 billion and was also looking at imposing a hiring freeze for 2015. Total’s spending in the North Sea, home to the benchmark Brent crude oil, will be reduced as profitability from fields there has worsened. The group’s UK unit will reduce contractor costs by 10 percent in 2015 and this will translate into an unspecified cut in contracted staff in the region.

US shale oil and gas production, which has surged in recent years, causing a large build in global oil supplies, will also be curtailed.

While many shale fields were profitable at oil prices of $70 a barrel, current low prices could lead to efficiencies that will reduce production costs below $50 per barrel.

Total has two joint ventures with US group Chesapeake Energy, one to drill for shale gas in the Utica basin in Ohio along with another partner, EnerVest, and another one in the Barnett Shale basin in Texas.

Total joins a raft of international oil companies, including BP and ConocoPhillips, that have slashed 2015 budgets due to lower oil prices.

Total may also abandon a search for oil and gas off Cyprus after failing to discover tangible signs of reserves.