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Total needs to cover US$12 billion shortfall

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As reported by Reuters, Total now faces a revenue shortfall of at least US$12 billion (£9.76 billion) due to the crash in oil prices, CEO Patrick Pouyanne has said, a third higher than its previous forecast made two months ago.

Total announced a plan in March to find cost savings, saying it said it expected a revenue shortfall of around US$9 billion due to the crisis in the oil market. Pouyanne’s comments on Friday indicate it will have to make more far-reaching cost cuts.

Total had expected the oil price to be at around US$60/bbl this year, but as the price is now at around US$30, it will leave the company with a much bigger shortfall, Pouyanne said.

“It is globally at least US$12 billion that we believe we must cover through our action plan due to the crisis,” he told a shareholders’ general assembly meeting.

Total announced plans to cut its investments this year by around 20%. It has also suspended its share buyback programme, and has said it will find additional savings.

Total plans to launch its 230 000 bpd project in Uganda by the end of the year, Pouyanne said, after agreeing to acquire all of Tullow Oil’s stake in the onshore oilfield.

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