CNOOC Ltd., China’s national offshore energy producer, will “significantly” cut capital expenditure and lower targets for oil and gas output in 2020 as oil prices plunge.

A global pact on cutting supplies between the Organization of the Petroleum Exporting Countries, Russia and other producers, a group known as OPEC+, collapsed this month, flooding the market with barrels, just as demand shrivelled in the face of the COVID-19 pandemic.

CNOOC, one of the industry’s lowest-cost explorers and producers, had planned to lift capital spending to 85-95 billion yuan (US$13.37 billion) this year, the highest level since 2014.

While the company is still discussing the scale of the cuts, its president Xu Keqiang said Wednesday that it “will strictly control investment, costs and the number of employees.”

Xu also said, again without giving further details, that the company will lower oil and gas production targets at its overseas projects, but maintain them for domestic sites.

CNOOC had planned to raise 2020 production to 525 million barrels of oil equivalent, while capital expenditure at the company was 79.6 billion yuan in 2019. (SD-Agencies)