Energy Giant BP to Revise Expenses as Profits Fall Amid Low Oil Prices

BP is planning to cut its capital expenditures by over $4 billion in 2015. Some projects will be postponed.

MOSCOW, (Sputnik) — UK oil and gas giant BP will have to revise its expenses as it enters a "challenging" era of low oil prices, the company said in a statement on 2014 results issued on Tuesday.

BP reported that its underlying replacement cost profit in the fourth quarter of 2014 was $2.2 billion in contrast with $2.8 billion for the same period in 2013, while the full-year replacement cost profit declined from $13.4 billion to $12.1 billion year-on-year.

"Our focus must now be on resetting BP: managing and rebalancing our capital program and cost base for the new reality of lower prices while always maintaining safe, reliable and efficient operations," BP CEO Bob Dudley said as quoted in the statement.

#BP reports financial results for #4Q and full year 2014 http://t.co/TD4kayOPXv $BP pic.twitter.com/NREYxEiUu6

— BP (@BP_plc) 3 февраля 2015

According to the statement, BP is planning to cut its capital expenditures by over $4 billion to reach $6 billion in 2015. Some projects will be postponed.

World oil prices have fallen by almost 60 percent since June 2014 due to market oversupply. The price of a barrel of Brent crude, which peaked at about $115 in summer 2014, currently hovers around $50.

Besides BP, industry leaders such as Shell, Premier Oil and Tullow Oil, have reduced expenses by putting new projects on hold and cutting hundreds of jobs. Earlier in January, the world's largest oilfield service company, Schlumberger, announced that it would cut 9,000 jobs.

During a November 2014 meeting, the Organization of the Petroleum Exporting Countries (OPEC) announced it would not lower its oil production level, which might have stabilized prices.