Chevron Slashes Spending Plans as Coronavirus Hammers Oil Demand

Chevron Corp. said it would cut its annual capital spending budget by 26% next year and sharply through the middle of the decade, as the coronavirus pandemic forces an industrywide reappraisal of fossil-fuel investment.

Chevron said it would spend $14 billion next year and no more than $16 billion a year through 2025. It previously said it would spend $19 billion to $22 billion a year through 2024 before the pandemic.

The reductions by the U.S. oil giant follow those announced this week by rival Exxon Mobil Corp. , which on Monday said it was reducing its yearly capital spending by about $5 billion to $10 billion each year through 2025. Exxon, which has lost more than $2.3 billion over the first three quarters of this year, also said it would slash the book value of its assets by up to $20 billion.

By some measures, the pandemic hit the energy industry harder than any other major segment of the U.S. economy in 2020. Oil-and-gas companies collectively lost more market value, on a percentage basis, from the beginning of the year than any other major sector. Dozens of companies sought chapter 11 protection from creditors, while tens of thousands of oil workers have lost their jobs.

The sizable spending cuts by Exxon and Chevron this week mean that there will be even less work for the oil-field services companies that employ many of the industry’s ground-level workers, and that oil regions in many parts of the world will see reduced economic activity.