March 10 (Reuters) - Cenovus Energy on Tuesday announced a near 32% cut to its capital spending for the year and a temporary suspension of its crude-by-rail program as an erupting Saudi-Russia oil price war dealt a blow to the struggling Canadian oil industry.
Crude prices suffered their biggest one-day rout since the 1991 Gulf War on Monday as top producers Saudi Arabia and Russia began a price war that threatens to overwhelm global oil markets with supply.
The Toronto Stock Exchange energy index plunged 27% on Monday, while Cenovus Energy dropped more than 50%.
The company said as a result of the temporary suspension of crude-by-rail program, it will no longer be making use of credits under Alberta’s special production allowance and expects oil sands production to average between 350,000 barrels per day (bbls/d) and 400,000 bbls/d for the year.
This is about 6% lower than the company’s earlier forecast.
Cenovus said it will continue to monitor the macro-economic and oil price environment and will look for additional opportunities to reduce operating and capital spending if necessary, and was deferring final investment decisions on major growth projects.
Alberta, home of the world’s third-largest oil reserves, has struggled for years as congested pipelines weakened prices and forced the provincial government to curtail production, a rare move aimed at bolstering sagging crude prices. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber)