BP cuts spend by quarter as virus slashes oil demand

British energy giant BP slashed its planned spending for 2020 by one quarter and announced a 1.0-billion dollars hit from collapsing oil prices as the coronavirus outbreak destroys demand.

The energy sector has been ravaged by the collapse in the global oil market where the problems have been made worse by a vicious price war between key producers Saudi Arabia and Russia.

BP spending this year will stand at 12 billion dollars, 25 per cent below prior guidance, it said in a statement.

The London-listed company added that it would deliver 2.5 billion dollars in cost savings by the end of 2021, compared with last year.

BP said its first-quarter results, due April 28, would include a 1.0-billion dollars charge linked to the market slump.

"We are in action to protect the financial health of BP," chief executive Bernard Looney said. "This may be the most brutal environment for oil and gas businesses in decades, but I am confident that we will come through it -- we know what to do and we have done so before."

World oil prices are languishing close to 18-year lows at around 20 dollars per barrel, having plunged by around 65 percent in the first quarter.

"We are now acting quickly and decisively to further strengthen our financial frame in response to the currently volatile and extremely challenging market conditions," Looney added.