REUTERS, DUBAI: State-run Kuwait Petroleum Corp. has instructed all subsidiaries to cut capital and operating spending this year due to an “unprecedented” decline in oil prices caused by the collapse of a global oil supply cut pact and the spread of the coronavirus which has hit demand, according to an internal memo seen by Reuters.

The memo, which was sent by KPC’s chief executive Hashem Hashem and dated March 18, said that all sectors in KPC and other subsidiaries must “rationalize spending and review their priorities in a way that does not impact the safety and continuity of operations.”

“This includes the plans and programs to increase profitability through boosting revenue, reducing operating costs... and reviewing required capital spending through canceling or postponing or cutting cost for programs and projects,” Hashem added in the memo.

KPC joins a number of other energy companies around the world who are slashing spending after the benchmark Brent oil price more than halved since the start of the year, to trade around $26 a barrel on Tuesday.

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.

All production limits were scrapped after Moscow rejected OPEC’s call for deeper production curbs, prompting Saudi Arabia, the world’s top oil exporter, and the United Arab Emirates to say they would both ramp up output to record levels.

Abu Dhabi National Oil Company (ADNOC) has notified contractors and suppliers that it will review existing deals to find ways to cut costs due to the steep slide in oil prices, according to three industry sources and a letter seen by Reuters.

Saudi Arabia’s national oil company Saudi Aramco, the world’s top oil producing firm, said this month it planned to cut capital spending for 2020 to between $25 billion and $30 billion, compared with $32.8 billion in 2019.